Alaska hydropower projects to receive millions in federal funding

Four Alaska hydropower projects will receive millions in federal funding as part of a nationwide program to upgrade existing facilities, Malcolm Woolf, president and CEO of the National Hydropower Association, said Wednesday at the Alaska Sustainable Energy Conference.

The U.S. Department of Energy recently agreed to resume negotiations to release $430 million for upgrades at about 300 facilities around the country, Woolf said. Alaska projects include Chugach Electric with the Alaska Energy Authority, Sitka, Ketchikan, and Alaska Electric Light and Power in Juneau. The Juneau project is expected to receive $5 million, Woolf said.

The announcement comes as federal tax credits have created new opportunities for hydropower construction. Woolf said projects that begin construction by the end of 2033 qualify for federal tax credits worth 30 to 50 percent of project value through provisions preserved in last year's federal tax legislation.

"You want to build new hydropower here in Alaska or anywhere else, it's now up to 50 percent off," Woolf said. "Hydropower is currently on sale between 30 and 50 percent off depending on where it is."

The tax credits include direct payment provisions that allow public power entities and rural communities to receive checks directly from the federal government. The Tennessee Valley Authority received a $25 million check through the program, showing the credits' availability to government entities that typically cannot benefit from tax incentives, Woolf said.

"If you're a public power entity, if you're a rural community and you think, tax credits don't really apply to me, I'm not a taxable entity, well, the Tennessee Valley Authority got a check for $25 million, literally a paper check, from using this program," Woolf said.

The federal support arrives as Alaska's hydropower infrastructure faces both opportunities and challenges. Hydropower currently provides about 30 percent of Alaska's electricity mix and serves communities across the state, Woolf said. Alaska has more than 200 communities that are not road-connected, requiring independent microgrids for electricity. Many facilities date back decades. Juneau's Gold Creek facility, for example, has operated since 1896 and still provides power downtown.

The Department of Energy funding is part of broader federal investments flowing into hydropower in the region. In February 2024, DOE awarded $76 million for four new hydropower projects in rural and remote communities, three of them in Alaska and one in Washington state, aimed at expanding clean energy access. A separate DOE study identified more than 1,800 potential sites in Alaska for pumped storage hydropower, highlighting the state's untapped potential for grid storage.

The tax credits apply to both new hydropower facilities and upgrades to existing infrastructure, including efficiency improvements and dam-safety and environmental upgrades, Woolf said.