Hydro project won't make or break mining

As Alaska embarks on building a major new hydropower generation project, the question of whether the endeavor could spur development of hardrock mines in Interior and Southcentral Alaska arises.

Gov. Sean Parnell signed energy legislation in mid-July aimed at moving the Susitna-Watana hydroelectric project toward licensing and construction with first power anticipated in 2023. Senate Bill 42, sponsored by the governor, allows the Alaska Energy Authority to advance the engineering and design of the Susitna Dam.

"The Susitna Dam project will provide an important and much-needed supply of renewable energy for our homes and businesses while creating jobs for Alaskans," Parnell said in announcing the move. "This project is key to achieving the state's target of 50 percent of electricity generation through renewable energy by 2025."

AEA expects licensing the project, which must undergo a rigorous review by federal and state agencies, to take six years, and construction will take five years.

The Susitna-Watana project requires building a 700-foot-high dam on the 250-mile-long Susitna River in an unpopulated area of the Talkeetna Mountains about 15 miles upstream of Devil's Canyon, an extreme stretch of whitewater at the Watana site. The dam would create a 39-mile-long reservoir with a maximum width of two miles.

Energy would be generated using the glacial waters of the upper Susitna River, and transmitted north to the Interior and south to Southcentral Alaska along new and existing transmission lines. The project will have an installed capacity of 600 megawatts, enough to supply half of the Railbelt's current energy needs at a stable or declining rate for the project's anticipated life of more than 100 years.

Parnell also reported that the Alaska Energy Authority is preparing to file a preliminary application for the project with the Federal Energy Regulatory Agency. AEA and the Mat-Su Borough are doing detailed mapping of the project site as well as conceptual design work, and the Department of Fish and Game is performing fish surveys in the region.

Affordable hydropower can help

Is the Susitna-Watana project good news for Alaska's mining industry?

Maybe, especially for potential mine projects located near Railbelt transmission lines. Still, hydropower would present unique challenges to a mining operation.

Hydroelectricity is the least expensive form of power in Alaska by 15 percent and the least expensive form of heat by a factor of 3.5 to 1, according to AEA figures.

Southeast Alaska, along with other areas of Alaska, is rich with hydroelectric potential, but some of the region's communities continue to use diesel generation to produce electricity, while larger communities like Juneau, Ketchikan and Sitka that developed hydroelectric power are reaching their electrical generation capacity, which increases their need for supplemental power from diesel generation.

Researchers say Southeast has adequate hydroelectric potential to serve all of its needs for decades to come if an intertie system was built to transport power to the region's high-use areas. In addition, the Southeast Conference produced a report in 2005 on the possibility and potential for selling surplus energy from Southeast Alaska to the North American power grid through the Bradfield road corridor and BC Hydro.

Without a regional electrical grid, isolated load centers in Southeast likely will continue to rely on high-cost diesel generation to meet immediate power needs.

A link between Juneau and Hoonah has provided hydropower service to the Greens Creek mine located on Admiralty Island about 20 miles (32 kilometers) southwest of Juneau.

Hecla Mining Co., owner of silver-rich Greens Creek, Aug. 9 reported that its mining and milling costs for the mine jumped 29 percent and 22 percent for the second quarter and six-month period ended June 30, respectively.

The increase was driven primarily by higher power costs from generating power on-site with diesel fuel due to lower availability of less-expensive hydroelectric power. The drop in hydropower resulted from recent lower precipitation levels in Southeast Alaska.

Hecla Mining President and CEO Phil Baker told mining analysts Aug. 9 that the company could not predict when it would be able to resume using hydropower at Greens Creek.

When asked if the company was hedging its diesel exposure, Baker replied: "We're not because we - the prediction of that is quite difficult. … We just don't know when we're going to have the hydro and when we're not with any specificity."

Alaska Electric Light and Power, Juneau's utility, reported Aug. 22 that recent rains have begun to fill area lakes, including those used by the utility to generate Juneau's hydropower.

System to meet current demand

As for Susitna-Watana, the project's manager at AEA told Mining News that "mines go forward on their own merits."

"This project is meant to replace existing capacity on the Railbelt, not necessarily to give the Railbelt new capacity," said AEA's Bryan Carey.

Once it is built, he said the system will provide 2,600 gigawatt-hours, or 290 megawatts continuously. That's enough electricity to supply half of Anchorage's power needs, or 40 percent of the power needs of the entire Railbelt.