Hydro Potential Reduction in Cost of Energy

The Alaska Division of Energy published the Rural Hydroelectric Assessment and Development Study in 1997. The study developed a database of existing and potential hydroelectric projects in Alaska. At that time, a total of 1,144 potential hydroelectric sites were screened, resulting in two potential projects with positive net benefits. These two projects, and another two that were close to potential positive net benefits were subjected to additional engineering review.

In 2007 Crimp, Colt, and Foster updated the capital cost estimates in the hydroelectric project database to year 2005 dollars.1 The estimated capital cost per installed kW in 2005 dollars ranged from $1,500 to $250,000 (mean = $25,800). Annual operation and maintenance (O&M) costs for each hydro project were also estimated for the project’s screening process in the earlier study, generally equal to 3% of capital cost. Project viability was re-screened under pessimistic, mid-case, and optimistic scenarios.

The high capital cost of hydro (both absolute and especially on a per kW basis for smaller projects) is the chief impediment to its economic feasibility. This cost tends to decrease over time as the original capital costs are paid down from power sales revenue and the low O&M cost features of hydropower prevail, however, higher fuel prices in the 2007 analysis, relative to those considered in 1996, were sufficient to propel several projects into the ranks of potentially feasible projects.

As part of the state energy plan process, a new screening of available hydro site studies and investigations was conducted by AEA. Utilizing a team of hydropower experts (the Hydro Technology Working Group) as a sounding board, this team took a fresh look at potential hydro sites closest to existing communities and used a variety of high level screens to identify the sites most viable for further investigation. The data identified from this process have been incorporated into the energy plan’s master database of energy technologies. Though not all sites are economic at today’s fuel prices, some 99 sites have been identified in this screening as having potential for future hydro development. Further information on these sites is available upon request.

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