Shovel Creek Wind could save GVEA members money

When paired with the implementation of several proven commercial and operational strategies, Shovel Creek Wind could save GVEA members money by displacing generation from expensive and volatile diesel and naphtha fuels.

About this analysis

The purpose of this study is to advance our understanding of the economic impact of wind energy on GVEA's system, and to identify the best opportunities to save members money under a wide variety of potential scenarios. Shovel Creek Wind is a project originated by Alaska Renewables, and now owned by a nationally recognized investor / developer / owner / operator. This economic analysis was developed solely by Alaska Renewables using publicly available fuel and generation cost information filed by GVEA with the Regulatory Commission of Alaska, as well as publicly available wind resource data collected with funding from the Alaska Energy Authority (AEA). It is not a study by GVEA or the current project owner. Alaska Renewables built a custom dispatch model of GVEA's system and analyzed the operation and economics of hundreds of scenarios to compile these interactive results. The results assume no federal tax credits for Shovel Creek wind.

Scenario controls

Wind capacity 120 MW

BESS capacity 25 MW

0 MW
No BESS10 MW25 MW

Enablers

Operational

regulation upgrades — selecting one auto-selects what it needs

Enable Zehnder offline regulationiOffline regulation: a unit is scheduled offline in the day-ahead commitment but committed to come online reliably within the 25-minute start time required for slow regulation. Certain units can be scheduled to provide offline regulation, which lets the system schedule less spinning thermal reserve, so more low-cost wind can be accepted. Standard practice: non-spinning / quick-start reserves are a routine reliability product in organized markets.Schedule Zehnders offline as 25-min reserve Backup Zehnder regulationiBackup regulation: a unit's full capacity is scheduled to provide up-regulation in the day-ahead commitment, and it is brought online in real time only if online/offline reserves drop below one hour of stored energy. A BESS provides that one-hour buffer, so backup units run far less. Modeled with a 10 MW, 2-hr battery. Builds on Zehnder offline regulation. Why it's reasonable: equivalent to standby/supplemental reserve tiers used widely; the battery simply guarantees ride-through while the unit starts.Full-capacity standby reserve + 10 MW BESS Backup NPSC regulationiNPSC backup regulation: lets the North Pole simple-cycle units also provide backup regulation, in addition to the Zehnders. With the one-hour BESS buffer, NPSC can fill this role, and its better heat rate lowers fuel burn when reserves are actually needed. Modeled with a 25 MW BESS. A logical extension of the backup-reserve concept to the most efficient available units.Add efficient NPSC units as reserve + 25 MW BESS Real-time regulation sizingiReal-time reserve sizing: instead of holding the reserve that was committed a day ahead, the system re-sizes reserve requirements in real time using the much more accurate 1–2 hour-ahead forecast. This cuts unnecessary backup-unit runtime and lets more wind be imported. Best practice: look-ahead, forecast-driven reserve sizing is a core feature of modern real-time markets and advanced EMS dispatch.Re-size reserve to short-term forecast

Commercial

market / contract strategy

Sell surplus energy to SouthcentraliSurplus-wind sales: "surplus wind" is wind that's available but can't be used on GVEA's system in that hour, so it would otherwise be spilled (curtailed). Instead of spilling it, GVEA exports it to Southcentral utilities and earns revenue. Revenue is computed directly from each scenario's spilled wind (surplus MWh × the sale price), validated against the model's own sale results. Note: the operational enablers reduce how much wind is spilled, so these sales are worth more when fewer operational enablers run — there's more surplus to sell. Common practice: economy energy sales between interconnected utilities are routine.Export otherwise-spilled wind to the Southcentral grid

Surplus-wind sale price 10 ¢/kWh

5¢10¢15¢

Base Case Assumptions

New LM6000 in base caseiGVEA is considering the purchase of a new LM6000 turbine at the North Pole Combined Cycle Plant, which would add firm capacity, improve system efficiency, and reduce its dependence on diesel. Default (ON): results are measured against a base case that includes this turbine (but does not include its capital costs — only the system operational costs). Off: the base case keeps today's units only. Without the new LM6000 the base case system leans harder on diesel.

Include Delta Wind (36 MW) in base caseiA few scenarios were run with the proposed 36 MW Delta Wind project added alongside Shovel Creek. On: results show Shovel Creek plus 36 MW of Delta Wind. Only the full complement of enablers with the new-LM6000 base case was modeled for Delta, so those settings are locked on while this is enabled.

Assume PACE-funded BESS can provide selected capacityiThe operational enablers pair wind with battery storage. GVEA has a proposed 46 MW BESS for which it is seeking a USDA PACE grant; that battery is likely to be built independently of Shovel Creek, so its capacity can be made available to the project as a commercial BESS capacity offering through Shovel Creek Wind. Default (on): the PACE-funded BESS provides the selected capacity, so storage adds no cost burden to the rate impact. Off: a new dedicated BESS is built in conjunction with Shovel Creek Wind, and the project bears its cost.

Diesel & naphtha fuel price $25 /MMBtu

$6
hist. min $12
prior EIA $25
hist. avg $38
GVEA 6/26 $52
hist. max

Projected change in GVEA retail rates

1.01¢/kWh lower

Member savings

$14.3 M/yr

vs. system without Shovel Creek

Oil displaced

14.5 M gal/yr

diesel + naphtha + LSR

Rate reduction

1.01 ¢/kWh

system net generation cost

Typical home

$5.55 /mo

at kWh/mo

GVEA's dispatched energy mix

Share of energy actually served to GVEA load by source for the current configuration (excludes surplus wind that is spilled or sold to other utilities).

Benefit builds as enablers are added

Rate reduction (¢/kWh) at the current wind size, fuel price and BESS-cost setting — bars to the right are savings. Your selection is highlighted.

A hedge against fuel-price volatility

Rate reduction vs. diesel/naphtha price for the current configuration. Savings grow as fuel gets more expensive.

Executive summary

Wind plus proven enablers is projected to lower costs for GVEA and its members

By implementing various proven commercial and operational tools, GVEA can use wind energy from Shovel Creek to displace expensive oil generation — saving members money, especially in times of average or higher-than-average oil prices. Even with the largest Shovel Creek size — and even when the 36 MW Delta Wind project is added — wind supplies only about 18–22% of GVEA's generation mix, leaving ample room to procure large shares of other low-cost fuel or generation resources should new opportunities arise in the future.

▸ Click Load this scenario on any finding to set the controls above to match it.

Bigger wind + full enablers = biggest benefit

The largest Shovel Creek size, implemented with the full complement of commercial and technical enablers, delivers the greatest economic benefit for members.

$14 M/yr

Saves even below average oil prices

With the full complement of enablers, this configuration saves members money even in scenarios with oil costs below GVEA's historical average.

≈ $25/MMBtu break-even

Displaces expensive oil

Proven commercial and operational tools let wind displace costly diesel, naphtha and LSR generation — the savings grow as oil prices rise.

14 M gal/yr

Marginal at low forecast prices

At the prior EIA fuel-price forecast — about $12/MMBtu, developed in 2025 for 2030 — even the smallest project (68 MW) with the full enabler complement is marginal, slightly raising costs. That EIA forecast sits well below GVEA's historical fuel costs since 2000 (in 2025 dollars), so the economics improve markedly as prices return toward historical norms.

≈ –0.5 ¢/kWh at $12

Why operations matter: same 120 MW wind, two ways of running the system

Rate reduction vs. fuel price at 120 MW Shovel Creek. The full complement (green) saves members money even below the historical-average oil price; current operations (amber) stay marginal until oil is very expensive.

Full complement (operational enablers + excess sales) Current operations (no enablers)

Methodology, assumptions & data sources

What's shown: the change in total system net generation cost from adding Shovel Creek Wind plus the selected enablers, versus today's system without Shovel Creek. Modeled in $/MWh and converted to retail rate impact at 1 $/MWh = 0.1 ¢/kWh. Negative = lower rates (savings).
Fuel price: the slider sets both diesel (oil) and naphtha price together, spanning the historical range $6–$52/MMBtu. The model was run at $10, 20, 25, 30, 40, 50/MMBtu; values are linearly interpolated between those points and linearly extrapolated to the $6 and $52 ends. Markers: $6 historical min, $12 = a prior EIA price forecast, $25 historical average, $38 = GVEA's filed cost for June 2026, $52 historical max. Coal ($4.30/MMBtu) and low-sulfur residual ($19/MMBtu) are held fixed.
Operational ladder: the modeled regulation configurations are nested — 0 MW BESS (no enablers, or Zehnder offline only) → 10 MW BESS (Zehnder offline + backup) → 25 MW BESS (+ NPSC backup) → (+ real-time regulation sizing). Controls snap to these modeled combinations.
Battery (BESS) cost: the battery used by the operational enablers is treated as a commercial BESS-capacity offering through Shovel Creek Wind, not a project capital cost. GVEA's proposed 46 MW PACE-funded battery is expected to be built independently, so by default no BESS cost is assigned to the project. The toggle "BESS capacity at no cost to the project" lets you instead place a stand-alone capacity charge on the project.
Enablers are grouped as operational vs. commercial. The operational enablers (regulation upgrades) form a chain — each was only modeled on top of the previous one, and each physically builds on it (backup regulation needs a regulation-capable unit and a BESS buffer; NPSC backup is modeled in addition to Zehnder backup; real-time sizing refines the backup logic). The commercial enabler (excess wind sales) is independent and on by default.
Surplus-wind sales (computed): "surplus wind" is wind that's available but can't be used on GVEA's system in the hour, so it would otherwise be spilled (curtailed). Revenue = each scenario's surplus wind (MWh) × the sale price (default 10 ¢/kWh; adjustable 5–15 ¢/kWh), divided by system energy to express as a rate reduction. At 7.5 ¢/kWh ($75/MWh) this reproduces the model's own full-stack sale result exactly, and the same method is applied at every operational level. Because the operational enablers reduce how much wind is spilled, standalone sales are worth more with fewer enablers running. Sales revenue scales with the price and is independent of fuel price and the BESS-cost setting; the surplus volume comes from the model's dispatch.
Note on 20 MW BESS: a 20 MW step exists in the underlying model but was only run at a single fuel price, so it cannot respond to the price slider; the price-sensitive view uses 0 / 10 / 25 MW.
Member savings ($/yr): rate reduction ($/MWh) × the scenario's total annual system net energy (≈ 1.41 million MWh from the model). Tracks fuel price through the rate reduction.
Oil displaced (gallons/yr): the reduction in liquid-fuel burn (diesel + naphtha + LSR) versus the current system without Shovel Creek. Energy densities from GVEA's 2025 RCA filing — diesel 128,422 Btu/gal; naphtha & LSR 102,268 Btu/gal. Generation mix and fuel volumes come from the model's dispatch run and respond to wind size and enablers (the dispatch mix is largely set by regulation capability, not by fuel price).
Dispatched energy mix: energy actually served to GVEA load by source, excluding surplus wind that is spilled or sold to other utilities.
New LM6000 toggle: GVEA's plan includes a new LM6000 turbine at the North Pole combined-cycle plant (the default base case). Turning it off compares against a base case with today's units only; without the new turbine the system uses more diesel, so wind displaces more oil. Each case is measured against its own no-Shovel-Creek baseline.
Typical home: illustrative only — monthly bill impact = rate impact × the kWh you enter (default 581 kWh/mo, GVEA's average residential monthly use).
No federal tax credits are assumed for Shovel Creek wind. Fuel cost relationships and densities are from GVEA COPA filings and the 2025 RCA annual filing; the base case uses diesel/naphtha extrapolated from >25 years of ANS West Coast crude prices.