State energy board weighs loan of nearly $5 million for solar farm at Red Dog Mine

The Alaska Energy Authority board votes Thursday, Nov. 5, on a state loan of up to $4,999,999 to help pay for a solar array and battery system at Red Dog Mine, according to the board's meeting packet.

Tugliq Red Dog1 LLC, selected by Teck Alaska, would build, own and operate the project. Teck would buy all the power it generates.

The mine runs on about 24.5 megawatts, all from diesel generators on site. Teck told the state Department of Natural Resources that in summer its generators must cut power to other parts of the mine to keep the mill running, and that forecast demand exceeds what it can generate. It expects the solar to carry up to about 2 megawatts of summer load.

The roughly $35 million project would pair an 8.8-megawatt array with an 8.8-megawatt, 15-megawatt-hour battery on about 30 acres of the millsite lease. The rest of the money would come from senior loans and Tugliq's own investment.

AEA staff set the loan at about $4.96 million, plus a roughly $45,000 closing fee, for 19 years at 5.57% interest. Staff kept it just under $5 million because the borrower wanted to keep the state's total involvement below that level. Above it, AEA's writeup says, legislative approval is required. AEA's loan committee approved it unanimously Oct. 15. The state's loan would be repaid after the senior lenders', which the committee said staff did not find to be a material risk. Before closing, the borrower's parent company must guarantee repayment, the rest of the funding must be secured and the power purchase agreement must be signed.

The loan would come from AEA's Power Project Fund, which lends to energy projects including those of small rural utilities. The fund carries $28.3 million across 15 loans, with $3.6 million uncommitted. AEA says that is not enough to cover future requests.

Teck told the state the project would not be economically feasible without a federal investment tax credit. AEA says work began in June, meeting the credit's safe harbor rules. AEA lists completion in October 2028, but Teck's plan, corrected in March, says construction will end in the fourth quarter of 2027.

AEA estimates the array would supply about 5% of the mine's power through 2031, the current end of the mine's life. That share would fall to about 3% if the mine's life is extended and rise to about 90% if the mine closes. AEA says the project does not depend on an extension.

The Department of Natural Resources approved the solar plan April 20. Teck remains responsible for cleanup and estimates the solar facility's closure cost at about $1.9 million.

The board meets at 9 am Thursday. Written comments are due by 4 pm Wednesday, Nov. 4.