- Alaska’s dwindling gas reserves raise electricity prices
- Solar and wind projects cancelled or on hold in Alaska
- Trump administration cuts federal funding for renewables
WASHINGTON – For people living in tiny fishing towns in Alaska, boosting wind and solar power would help lower exorbitant electricity prices, but this solution to high costs is under threat now that the government is cutting federal funding for renewable energy.
Alaskans pay nearly twice as much for electricity than the national average.
“It would definitely hurt the community to be forced to pay higher energy prices,” said Matt Goodnow, a resident and financial counselor for a hospital in Homer, a fishing town on Alaska’s Kenai Peninsula.
“There are a lot of struggling people here,” he said.
Not only is President Donald Trump’s administration planning to phase out federal funding and tax breaks for renewable energy projects, but it is proposing to set under former President Joe Biden on oil and natural gas drilling in Alaska.
Plans to to the Alaskan energy grid have been upended, with leading companies cancelling or pausing renewable energy projects.
In Alaska’s Railbelt – an electrical grid that includes roughly 75% of the population – analysts expect the cost of power to residents to rise in coming years.
The rising price is largely due to a dwindling supply of readily available liquified natural gas extracted from the nearby Cook Inlet watershed.
The natural gas is fired to generate about 70% of the Railbelt’s electricity, said Ben Boettger, an energy policy analyst at the Inletkeeper, an environmental nonprofit based in Homer.
But the natural gas fields, most of which were developed in the 1960s, are running low, he said.
“The largest of these are nearing the end of their economic lives,” he said.
A 2023 report by consultants at BRG and Cornerstone estimated current reserves of natural gas in Cook Inlet can meet energy demand .
After that, exploration for new gas would be required, which could double the cost of electricity for consumers by the mid-2030s, experts say.
As readily available reserves are depleted, accessing new reserves becomes expensive for gas companies, and that cost is passed on to consumers, Boettger said.
The U.S. government recently called for the sale of to address the shortage as well as drilling in the remote wilderness of the Alaska North Slope to tap into .
Gas extracted in the North Slope is currently not accessible to serve as fuel for electricity for the Railbelt.
However, there are plans, led by private developers Glenfarne Group LLC, to expand the infrastructure and connect the power grid to the gas supply, which the company says would stabilise electricity prices.
But the project and to complete.
Glenfarne declined to comment. Hilcorp, a gas company that owns most of the development leases in Cook Inlet, also did not respond to requests for comment.
Meanwhile, there are plans to to fill supply gaps, but prices could be volatile and raise the cost of electricity by 50%, Boettger warned.
Boettger proposes , which could be inexpensive and quickly deployable sources for the Railbelt, taking demand off natural gas and helping stabilize the price of electricity.
“Conserving the dwindling gas supply by deploying renewables is an urgent local priority,” Boettger said.
Cancelled projects
The 2022 Inflation Reduction Act passed during the Biden administration aimed to boost renewable energy development with grants and offered through the 2030s.
It helped attract more than $450 million in planned development of renewable energy sources that serve the Railbelt, including plans to construct the state’s largest solar farm.
For Alaska, with a small consumer market of about 555,000 people living on the Railbelt, the government support was key to making large-scale projects viable for investors, said Boettger.
But the Trump administration has cancelled grants and drastically shortened the timeline for benefiting from .
Asked about phasing out support for renewables, the Department of Energy highlighted its gas drilling efforts in Cook Inlet and the North Slope.
“Unlike wind and solar subsidies, these provisions will help deliver more reliable, affordable and secure American energy for the entire country, including Alaska, regardless of whether the wind is blowing or the sun is shining,” the department wrote in an email.
The shorter timeline for tax credit benefits is problematic for Alaska, where long, harsh winters and rugged, remote terrain create a short window for construction, said Jennifer Hyde, a federal infrastructure coordinator at the Alaska Center, an Anchorage-based nonprofit that advocates for clean energy.
“For a lot of folks, this is going to mean cancelled projects,” said Hyde.
Ben May, founder and CEO of Alaska Solar, the largest solar installer in the state, said eight out of nine solar projects it had in development will likely be cancelled due to funding cuts.
“It’s just depressing and baffling why we wouldn’t want to provide cheaper electricity in a better way,” May said.
Renewables IPP, another energy developer, has pulled out from plans to build the largest solar farm in the state.
Slated to be operational by 2027, the project would have powered about 9,000 homes along the Railbelt.
The company as a key reason the project had become economically unviable.
For Hyde, noting that in summer months the state has almost 24 hours of daylight, it is a missed opportunity to boost solar power.
“We’re taking away our ability to add cheap energy into our system, really, when it matters the most,” she said.
(Reporting by Zach Theiler. Editing by Anastasia Moloney and Ellen Wulfhorst.)
