State energy board to vote on nearly $5 million loan for solar at Red Dog Mine

The Alaska Energy Authority's board is scheduled to vote Nov. 5 on lending nearly $5 million in state money toward a solar array and battery at Red Dog Mine, whose power comes entirely from diesel generators, according to the board's meeting packet.

The mine uses about 24.5 megawatts. In summer, Teck Alaska told the state, its generators have to cut power to other parts of the mine to keep the mill running, and the company forecasts needing more power than it can generate.

The project, estimated at about $35 million, would put an 8.8-megawatt solar array and a battery on about 30 acres at the mine. Teck chose Tugliq Red Dog1, a subsidiary of Canadian company Tugliq Energy, to build, own and run it. Teck would buy all of its power.

The array is expected to supply up to about 2 megawatts of the mine's summer load. AEA estimates it would provide about 5% of the mine's power through 2031, when the mine's current life is expected to end, and about 3% if the mine's life is extended. If the mine closes, it would cover about 90% of the site's power needs.

Teck told the state the project would not be economically feasible without a federal investment tax credit. To qualify, the company said, construction had to start by June 2026 or finish by December 2027. Without the credit, it said, it would have to look at options such as more generators, wind, temporary generation or more fuel storage. Work began in June, according to AEA.

AEA staff reduced the loan to about $4.96 million because the company wanted to keep the state's total involvement under $5 million, the amount above which such a loan needs legislative approval. It would run 19 years at 5.57% interest and be repaid only after the project's senior lenders, which AEA staff said they did not find to be a material risk. Tugliq's parent company would have to guarantee it.

The loan would come from AEA's Power Project Fund. The fund's uncommitted balance is $3.6 million, which AEA says won't be enough to meet future loan requests.