Many Southeast Alaska homeowners are converting to electric heat pumps as a way to reduce reliance on fossil fuels and improve air quality. But in some of Southeast’s smallest communities, the high cost of electricity makes operating them unaffordable. A recent study found that offering a special rate for heat pumps in the Kupreanof Island village of Kake and other remote communities could help the electric utility, the environment and the consumer.

Kake resident Adam Davis decided to convert to a heat pump about four years ago. Before that, he was using a pellet stove, but barging in fuel was getting expensive. 

When Tlingit-Haida Regional Housing Authority offered to install a heat pump for free as part of a pilot program, it piqued his curiosity.

“I was willing to be a guinea pig to see whether or not they were viable here,” he said.

Davis doesn’t have any complaints about his air source heat pump. The devices can work like an air conditioner, using electricity to move hot air outside during the summer. But unlike an air conditioner, they can also move warm air into the home to provide heat in the winter. They also provide added benefits like air filtration, compared to wood and oil heating, which can reduce indoor and outdoor air quality. 

Davis said maintaining and operating the heat pump is also a lot easier than the pellet stove, and he’s only seen a slight increase in his electricity bill. Even with that increase, he thinks he’s saved money not having to buy the pellets for his stove. 

But that wouldn’t be the case if it was his only source of heat, especially when temperatures drop below freezing. He also has propane and oil heaters for his nearly 2000-square-foot home.

“I see them as a great, you know, complementary type of heat source. Not as a primary heat source just because of the wide swings in our temperature here,” he said. “I don’t think you can rely on them in the coldest of months.”

Davis is one of six Kake residents to benefit from the program so far, including a few of his neighbors. He said they installed heat pumps as their only source of heat and their electric bills skyrocketed, minimizing or eliminating savings from not having to buy heating fuel.

Like many rural Alaska communities, the cost of electricity in Kake is high: 1.5 times the state average and 2.5 times the national. And that’s when you factor in something called Power Cost Equalization, a state program that subsidizes rural energy costs. In Kake, any usage over 500 kilowatt hours a month is about double the cost because it isn’t covered by the program. And the added electrical demand of heat pumps can easily push a household over that threshold.

That’s one of the reasons the Inside Passage Electrical Cooperative or IPEC worked with the Alaska Center for Energy and Power to study whether a lower rate for heat pump users might be a good fit for Kake and the four other communities they serve.

“I do understand that people are having a hard time, you know, those who have heat pumps are having a hard time paying the extra amount on their electric bill every month,” IPEC CEO Jodi Mitchell said. “And so some of them are really struggling with that.”

She said it’s expensive to provide electricity to the remote communities IPEC serves because they each have their own infrastructure, like diesel generators or hydroelectric dams. And IPEC has way less customers to carry the burden of those fixed costs than in a city. As customers cut back on electrical use and introduce energy efficiency measures to try and save money, it can actually make rates per kilowatt hour go up because the utility still needs a minimum amount of money coming in to keep things running. 

“People always say IPEC has to be more efficient, and IPEC’s customers need to be more efficient. It doesn’t work that way because of the economies of scale factor,” Mitchell said. “The more we sell the cheaper it is for everybody. That’s it in a nutshell.”

Introducing a special rate for heat pumps could encourage more customers to use them, and the money they’d normally spend on imported fuels would go toward electricity instead. And even though IPEC would absorb the cost of the special rate, the study shows that it’s still worth it financially because it would help them sell more power.

The study also shows that, with the special rate, consumers would save money on heating in the long run, even if they have to cover the cost of the heat pump and installation. But with the program Davis benefited from, that could come for free.

And finally, in places like Kake where renewable hydropower is in play, heat pumps are a win for the environment because they replace non-renewable fossil fuels with clean energy.

Mitchell is excited about the findings, but also recognizes their limitations. IPEC doesn’t want to overload their microgrids either. They’ll likely have to limit the number of residents who can benefit from the special rate, which would apply to any usage over 500 kWh a month.

“So we’re trying to find this sweet spot: how many can we allow, assuming that our system was using a peak demand from like January? If we added this much more burden on our electric system, would we have to start up another generator? And that’s what we want to avoid,” Mitchell said.

The study put that sweet spot at about a quarter of Kake households installing heat pumps. 

Gary Williams is a former Executive Director of Kake’s Tribal government, the Organized Village of Kake. He’s been working on a grant-funded project to study heat pumps and electric vehicles to help Kake address energy issues, and hopes IPEC will implement the special rate.

“Because without that rate for heat pumps and EVs, it quite frankly, probably wouldn’t be practical,” he said.

He said looking to alternative solutions to address the high cost of energy in Kake is imperative. It doesn’t just impact households; it has a broader effect on the entire economic development of the town.

“Time after time, we’re faced with the high cost of electricity just making it impractical and unfeasible for anyone to develop new businesses,” Williams said.

IPEC plans to hold a meeting with its members in early June to discuss the special rate for heat pump users. If implemented, customers would apply on a first-come, first-served basis. 

Erin McKinstry is a Report for America corps member. This story was produced in collaboration with Alaska’s Energy Desk.

Alaskans spend nearly sixty percent more on energy than the national average, and in some rural communities, that number is much higher. The Kupreanof Island village of Kake is trying to bring down the high cost of energy by transitioning to renewables. They’ve looked at solar, wind, hydro and now biomass heating, an old technology with a new design.

When Gary Williams retired after 30 years as executive director of Kake’s Tribe, the Organized Village of Kake, he decided to turn his attention to energy.

“The cost of energy here is high, so if we can come up with some more affordable energy, it’s always a good thing to pursue,” he said.

He worked on a successful solar project and helped conduct feasibility studies for wind energy. And now, he’s working to replace the tens of thousands of gallons of non-renewable heating oil used to heat the town’s school and other large facilities with a renewable and readily available resource: wood. 

“We’ve got a fuel supply that’s literally in our backyard. We’re in the middle of the Tongass,” Williams said. “So it would reduce the need for imported fuels and also at the same time as we harvested our local fuels, it would create jobs and put money into our local economy.”

Burning wood to stay warm is obviously an ancient technology, but the system that Williams and other energy stakeholders in Kake are hoping to implement is high-tech. Special sensors and multiple chambers mean it burns hot and efficiently. The impact on air quality is the same or less than a system that uses heating oil. 

It’s called a biomass district heating system. 

“Biomass means a lot of things,” Clay Good, who works for the Renewable Energy Alaska Project or REAP, said. He’s been involved with several of Kake’s renewable energy projects. “It can mean food waste or fish waste or anything that’s biological, any carbonaceous material that can be utilized for some kind of energy source.”

In this case, it means wood that’s leftover from thinning of second growth forests or from timber operations. 

“It’s not a big leap to think well if that’s just left there, it’s gonna be burned. Let’s use that material,” Good said. “We’ll just grind it up into chips and feed it into our industrial boiler here.”

If Kake’s system becomes a reality, it could heat the school, senior center, health center, community center and other public buildings and save the community nearly $100,000 a year on energy costs. 

And Kake’s not the only community looking into biomass. Dozens of places around the state are already using it. The interior town of Tok also uses their system to produce electricity through steam for their school. Local school district Superintendent Scott MacManus said it’s saved them money and created jobs since they first implemented it a decade ago.

“Besides just a couple jobs running the plant, we are able to hire counselors that we didn’t have before and for a while we had a music program,” MacManus said. “It was because of the funding that we were able to save with the school.”

He admits there were challenges, like finding people knowledgeable enough to work on the technology or convincing community members that it was a good idea. And, he said, it’s not the right fit for everyone.

“One of the things about renewable and sustainable energy is that it’s got to be specific to where you are. You have to look at what’s available locally,” he said.

But Gary Williams thinks it is the right technology for Kake. And one more step toward energy independence, energy affordability and sustainability.

Besides making this work for our community today, we want to make sure we leave a good world for our grandchildren too,” Williams said.

Kake was awarded a USDA grant to design their biomass system. They received the design plans back earlier this summer. Now, they just have to find the funding to build it.

Erin McKinstry is a Report for America Corps member. This story was produced as part of a collaboration between KCAW and Alaska’s Energy Desk.