ALASKARENEWABLES
Analysis by Alaska Renewables · alaskarenewables.com

Shovel Creek Wind could lower Alaska utility bills

When paired with several proven commercial and operational strategies, Shovel Creek Wind could save GVEA members money by displacing generation from expensive, volatile diesel and naphtha fuels. It would also diversify the Railbelt's energy supply while reducing its greenhouse gas emissions and environmental impact. Its surplus energy can flow south to offset scarce Cook Inlet natural gas in Southcentral, lowering costs for utilities across the Railbelt and, through the Power Cost Equalization program, for rural communities statewide.

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.

A prior Railbelt-wide study by Energy and Environmental Economics (E3), Integrating Wind Energy in Alaska's Railbelt, reinforces these approaches and benefits, finding that the grid can reliably absorb large amounts of wind while cutting annual operating costs by roughly $100 million and lowering system-wide CO₂ emissions by about 25%.

Projected change in GVEA retail rates
1.01¢/kWh lower
Member savings
$14.3 M/yr
GVEA system, vs. today
Oil displaced
14.5 M gal/yr
diesel + naphtha + LSR
Annual Residential Member Savings
$66 /yr
at kWh/mo
Emissions reduced
— tons CO₂e/yr
— below GVEA's total, vs. today

Emissions are estimated from each unit's modeled fuel use and typical plant heat rates, using standard fuel CO₂ factors (distillate, naphtha/LSR and coal). Beyond the environmental benefit, cutting emissions is an important way for GVEA to unlock a large share of federal funding under its already-awarded USDA New ERA grant.

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.

Operational results: how GVEA dispatch changes

Annual change in each of GVEA's oil-fired power plants' dispatch, by unit, versus today's system (no Shovel Creek, no Delta, no enablers), at the modeled base fuel price. Output, hours online and starts are per year; Δ = this scenario minus today, and a reduction (green) means the unit runs less.

Take-home: adding wind sharply cuts the oil burned in GVEA's turbines and the hours those units run, directly lowering fuel and maintenance costs. Some units do see more starts; note, however, that this model did not attempt to minimize starts. More sophisticated dispatch forecasting and operational approaches could substantially reduce that cycling if increased starts prove to be a meaningful O&M concern. GVEA could also procure flexible regulation services from efficient Southcentral gas plants instead of cycling its own oil units, a lower-cost path to integrating wind that further eases strain on GVEA's oil-based generators (see Benefits to Southcentral Alaska below).

Benefits to Southcentral Alaska

Interior wind can offset scarce Cook Inlet natural gas

Surplus wind generated in the Interior, energy GVEA can't use in the moment, can flow south over the Railbelt intertie and displace natural gas burned in Southcentral power plants. As Cook Inlet gas runs short and utilities turn to costly imported LNG, every avoided unit of gas matters for the whole grid.

Surplus wind exported
— GWh/yr
excess Interior wind sent south
Natural gas avoided
— BCF/yr
at a ~50%-efficient LM6000 combined cycle
Southcentral gas-cost avoided
$— M/yr
gross value of imported LNG not burned; fuel only, before the cost of supplying the wind
Imported LNG price $20 /MCF
$12
Cook Inlet-era$20$25
imported LNG

Why this matters across the Railbelt, and beyond

For decades, GVEA and the Interior imported low-cost, gas-fired power from Southcentral utilities across the Alaska Intertie. The decline of Cook Inlet natural gas has brought that practice to a near halt: Southcentral utilities face a supply shortfall as early as 2027 and are preparing to import liquefied natural gas (LNG) at a delivered cost several times the historical Cook Inlet price.

Wind built in the Interior can flip that flow. Surplus generation can move south to offset gas demand in Southcentral, stretching remaining Cook Inlet reserves, reducing the volume of expensive LNG that must be imported, and helping lower costs for every Railbelt utility and its ratepayers.

The intertie can also carry a two-way partnership. Rather than cycling its own oil-fired units to balance wind, GVEA could procure flexible regulation services from efficient Southcentral gas plants, a lower-cost way to integrate wind into the Railbelt that eases wear on GVEA's oil generators and saves members money. For Southcentral utilities, it is a chance to better recover costs from the flexible, efficient units they already own, turning idle capacity into revenue.

Those benefits reach beyond the road system. Alaska's Power Cost Equalization (PCE) program keeps electricity affordable for roughly 200 rural communities and 82,000 residents, and was created so rural Alaskans share in the same energy investments that lower costs on the Railbelt. A stronger, lower-cost Railbelt supports the broader statewide energy economy, and the communities PCE serves.

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.

1

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
2

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
3

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
4

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).
  • Emissions reduced (tCO₂e/yr): the drop in annual CO₂-equivalent emissions versus the current system without Shovel Creek. Each unit's modeled fuel use is combined with standard EPA CO₂ factors (distillate 73.96, naphtha/LSR ≈68, coal ≈97.2 kg CO₂/MMBtu); coal generation is converted to fuel using a typical 11,500 Btu/kWh heat rate. The percentage is the reduction relative to GVEA's modeled total emissions today. Beyond the environmental benefit, verified emissions reductions help GVEA unlock a large share of the federal funding under its already-awarded USDA New ERA grant.
  • 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.