Alaska microgrid technologies: micro-industry or big business?

• Author: Callen, Samuel
• Position: SPECIAL SECTION: Energy & Power

One of the most pressing (and frequently noted) challenges in Alaska is the cost of energy (both heat and power) in isolated, rural communities. Many are faced with inefficient energy systems that come at a considerable cost not only to community residents but to the state as a whole. In the 2014 fiscal year, the State of Alaska issued $39.6 million in disbursements to communities through its Power Cost Equalization program, which pays a large share of the electrical costs for rural residential consumers in an effort to keep rates low. The crippling cost of rural energy also inhibits the development of community businesses, which must pay market rates and are ineligible for Power Cost Equalization reductions. Adding the cost of heating and transportation fuels drives a large portion of the remote community population into energy poverty, a term generally used for those that expend more than 10 percent of their income on basic energy needs.

This adversity has spurred innovation, however. One emerging market to arise from this challenge is in the development of new microgrid technologies. According to market research firm Navigant Research, the estimated global microgrid market will reach $20 billion by 2020, with Alaska's market share potentially accounting for over $290 million. These projected trends indicate a growing opportunity within the state--the commercial ization of microgrid research and innovation. Such advancements could not only reduce the costs of energy for thousands of Alaskans but the technologies developed here could be implemented in other developing parts of the world where microgrids are common.

What Are Microgrids?

Microgrids are small-scale electricity systems aimed at achieving a particular local goal such as reliability, carbon emission reduction, energy diversification, and cost reduction. Essentially, microgrids function like a small-scale version of a traditional power grid--they generate, distribute, and regulate the flow of electricity to consumers, but do so locally rather than as part of a much larger integrated system. A growing trend is to take a more holistic approach to energy systems within microgrid communities and also consider ways to leverage heating and water and waste water services as part of the systems that can be utilized to balance supply and demand within these microgrids.

Alaska's microgrid context provides a "living laboratory" unique in its scope of grid size, energy resource diversity...