Clean energy business: Alaska invests in renewable power.

• Author: Hollander, Zaz
• Position: SPECIAL SECTION: Energy & Power

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Alaska's Renewable Energy Fund aims to incentivize the growth of clean power in the state built by Big Oil. The Alaska State Legislature created the fund in 2008 to appropriate up to $50 million a year for five years to equalize energy costs around the state and wean rural Alaska from its dependence on expensive diesel. Gov. Sean Parnell signed a 10-year extension of the fund's authorizing legislation in May.

Thanks in large part to the Renewable Energy Fund, Alaska has one of the largest dedicated renewable energy funds in the United States, according to the Clean Energy States Alliance. The amount of Alaska's fund is second only to the state of California, although New York, New Jersey, Massachusetts and Connecticut also administer substantial clean energy funds and provide additional funding through other programs.

Alaska ranks at the top of the list in terms of per capita spending, says Chris Rose, executive director of the Renewable Energy Alaska Project, an Anchorage-based nonprofit with the mission of facilitating renewable energy development. REAP pushed for the creation of the Renewable Energy Fund back in 2007.

"It was clear Alaska had a lot of renewable energy resources and we had the need to develop them because our reliance on diesel was becoming less sustainable as the price of diesel went up," says Rose, who now sits on the fund's advisory committee. "It was clear we needed some sort of mechanism to jump start the business of renewable energy."

Putting the Fund to Work

Since 2008, the state has appropriated more than $200 million to 227 projects operated by renewable energy entrepreneurs, utilities, and local and tribal governments, according to the Alaska Energy Authority, which administers the program. Projects include everything from wind turbines to tidal power, solar to hydro, often in rural communities otherwise dependent on expensive diesel.

So far, 21 projects have been completed, displacing 3.4 million gallons of diesel and saving communities more than $11.2 million every year, according to REAP.

Using the state grant funds, the school at Tok developed a biomass-fueled heating system that uses black spruce chips from a fire-reduction project to produce power. By heating the main school house, the project saves the Alaska Gateway School district $180,000 a year in heating expenses, and another $150,000 a year in lighting costs because the school is feeding electricity back into the grid.

"It's a real success story," says Karsten Rodvik, spokesman for the Alaska Energy Authority. However, making renewables a widespread part of...