The Kodiak Electric Association completed the $81.7 million Upper Hidden Basin Diversion project at the end of October, nearly a year ahead of schedule. 

KEA connected two streams east of the Terror Lake reservoir through a pipeline, diverting them to the lake through a 1.2-mile tunnel measuring 11 feet in diameter. 

The project was projected to end in September 2020 but finished ahead of schedule and slightly under budget, said Darron Scott, KEA president and chief operating officer.  

The diversion will add 25% more energy, Scott said. 

“With our projections we are in the 2030s before we need to look at additional renewable generation,” he said. 

When the Terror Lake Hydroelectric Project was built in the 1980s, plans were made to eventually divert the two streams, Scott said. 

At the time, extra renewable energy was not necessary. Since energy use has grown steadily through the years, KEA decided the diversion was necessary.  

“We he had maxed out our ability to do wind (energy) and keep our electric grid stable,” Scott said. “It was the most feasible, cost-effective project we had.”

The success of the project is primarily due to the groundwork completed beforehand, Scott noted.   

“We had a good engineering team. Kiewit construction did a great job as well, getting everything together and doing the construction well,” he said. 

Lachel-Schnabel Engineering was the engineering firm that worked on the project. 

Funding came from a combination of a $40 million clean renewable energy bond and a $30 million loan from a partnering financial institution. About $10 million was funded through short-term financing or cash. 

“It’s a great feeling to be part of a project that is low maintenance — it’s basically  water rolling downhill into the existing hydroelectric project,” Scott said. “Its emission-free. It’s just a win-win all the way around.”

A portion of the budget included funding to replace diesel boilers with electric boilers at the high school, middle school and the Near Island Kodiak Fisheries Research Center. 

Because the Upper Basin diversion project was built to produce energy for increasing usage in the future, there is currently an excess amount of energy being produced. 

“When you build hydro, as load grows, you build enough power to handle that future load,” Scott said. 

The KEA approached the Kodiak Island Borough to use this excess energy to help lower the cost of utilities for the school district. 

The KEA and the borough studied the energy usage of different buildings, cost of construction and how much money KEA would make back on the electricity. They decided that the two schools and the research center were the most suitable candidates for the project, said Matt Gandel, the borough project manager. 

With electric boilers, the school district and the borough will pay interruptible rates, meaning the boilers will be turned off depending on how much energy is needed by KEA’s customers. 

“As our load grows and we can’t provide (the schools and research) center with renewable energy, we would turn it off,” Scott said. “They will have a lower cost. It will be cheaper than their price of using diesel to heat those buildings.”

Once turned off, the school will be able to run on normal rates, or use oil in the future. 

“We are many years off before that happens,” Scott said. 

Once energy usage increases and the KEA cannot provide these buildings with as much renewable energy, they will be able to shut off the electric boilers and return to normal rates. 

With this project “the electric cost is going to be cheaper than what the fuel cost would,” Gandel said. “It’s a great partnership between the KEA, borough and the school district.”

Gandel said the boiler at the middle school was finished in 2018. He also said he expects the boilers to be operational in the high school by mid-January and the boilers in the research center to be operational by mid-february. 

KEA is a nonprofit cooperative owned by its members that operates on an isolated grid and has 33 miles of transmission lines and 350 miles of distribution lines, serving approximately 6,000 meters. 








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