[Senate Hearing 115-37]
[From the U.S. Government Publishing Office]




                                                         S. Hrg. 115-37
 
       INNOVATION IN ACTION_MICROGRIDS AND HYBRID ENERGY SYSTEMS

=======================================================================

                             FIELD HEARING

                               BEFORE THE

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 10, 2017

                               __________



[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]





                       Printed for the use of the
               Committee on Energy and Natural Resources        
       
               

        Available via the World Wide Web: http://www.govinfo.gov
        
        
                            _________ 

                U.S. GOVERNMENT PUBLISHING OFFICE
                   
 25-978                  WASHINGTON : 2018            
        
        
        
        
        
               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                    LISA MURKOWSKI, Alaska, Chairman
JOHN BARRASSO, Wyoming               MARIA CANTWELL, Washington
JAMES E. RISCH, Idaho                RON WYDEN, Oregon
MIKE LEE, Utah                       BERNARD SANDERS, Vermont
JEFF FLAKE, Arizona                  DEBBIE STABENOW, Michigan
STEVE DAINES, Montana                AL FRANKEN, Minnesota
CORY GARDNER, Colorado               JOE MANCHIN III, West Virginia
LAMAR ALEXANDER, Tennessee           MARTIN HEINRICH, New Mexico
JOHN HOEVEN, North Dakota            MAZIE K. HIRONO, Hawaii
BILL CASSIDY, Louisiana              ANGUS S. KING, JR., Maine
ROB PORTMAN, Ohio                    TAMMY DUCKWORTH, Illinois
LUTHER STRANGE, Alabama              CATHERINE CORTEZ MASTO, Nevada

                      Colin Hayes, Staff Director
                Patrick J. McCormick III, Chief Counsel
   Brianne Miller, Senior Professional Staff Member & Energy Policy 
                                Advisor
               Benjamin Reinke, Professional Staff Member
           Angela Becker-Dippmann, Democratic Staff Director
                Sam E. Fowler, Democratic Chief Counsel
          Brie Van Cleve, Democratic Professional Staff Member
          
                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Murkowski, Hon. Lisa, Chairman and a U.S. Senator from Alaska....     1
Cantwell, Hon. Maria, Ranking Member and a U.S. Senator from 
  Washington.....................................................     4

                               WITNESSES

Koplin, Hon. Clay, Mayor, City of Cordova, Alaska, and CEO, 
  Cordova Electric Cooperative, Inc..............................     7
Ellis, Dr. Abraham, Principal Technical Staff, Sandia National 
  Laboratories...................................................    14
Holdmann, Gwen, Director, Alaska Center for Energy and Power, 
  University of Alaska Fairbanks.................................    21
Kohler, Meera, President and CEO, Alaska Village Electric 
  Cooperative,   Inc.............................................    30
Larson, Geoff, Co-Founder and President, Alaskan Brewing Company.    39

          ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

Cantwell, Hon. Maria:
    Opening Statement............................................     4
Ellis, Dr. Abraham:
    Opening Statement............................................    14
    Written Testimony............................................    17
Holdmann, Gwen:
    Opening Statement............................................    21
    Written Testimony............................................    24
Kohler, Meera:
    Opening Statement............................................    30
    Written Testimony............................................    33
Koplin, Hon. Clay:
    Opening Statement............................................     7
    Written Testimony............................................    10
Larson, Geoff:
    Opening Statement............................................    39
    Written Testimony............................................    42
    Supplemental Testimony.......................................    63
Murkowski, Hon. Lisa:
    Opening Statement............................................     1


       INNOVATION IN ACTION--MICROGRIDS AND HYBRID ENERGY SYSTEMS

                              ----------                              


                        SATURDAY, JUNE 10, 2017

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                   Cordova, Alaska.
    The Committee met, pursuant to notice, at 10:03 a.m. AKST 
at the Cordova Center, Cordova, Alaska, Hon. Lisa Murkowski, 
Chairman of the Committee, presiding.

           OPENING STATEMENT OF HON. LISA MURKOWSKI, 
                    U.S. SENATOR FROM ALASKA

    The Chairman. Well, good morning. It is a clear sign of 
success when you have to open the back of the hearing room and 
add additional chairs. So thank you all for being here.
    This hearing of the Energy and Natural Resources Committee 
for the United States Senate will come to order. I would like 
to welcome all those who have joined us this beautiful Cordova 
morning.
    I would like to start by thanking the community of Cordova 
for hosting us today. Mayor, it is always good to be back in 
your town. I know that I am not supposed to pick favorites 
among communities.
    [Laughter.]
    But I think the folks here in Cordova know that I have a 
very, very special place in my heart for this community and for 
its people and for its fish.
    Tonight is always a fun evening where we recognize the 
value, the benefit and really, all the good that comes to a 
community when you have good, strong resources such as our 
Copper River salmon. So there is good reason to celebrate, and 
that reason to celebrate actually allowed us to select Cordova 
as the site for a field hearing for the Energy Committee.
    When Mayor Koplin appeared before the Committee in 
Washington, DC, earlier this year, we were speaking about 
infrastructure and the discussion was pretty broad-ranging. We 
had the Mayor of Cordova speaking about a community like 
Cordova--that is islanded in the sense of not being part of any 
infrastructured grid. His testimony was so compelling in how he 
described the attributes of this beautiful fishing community 
that it sparked others on the Committee to say, maybe we should 
have a field hearing there. I think it might have been 
suggested initially by Senator Franken, and Senator Cantwell 
and I looked at one another and said, why not?
    [Laughter.]
    Why not?
    The opportunity to be here in person to see the integrated 
energy system that has helped move this community off of diesel 
generation is why we are here this morning, not just to focus 
though on Cordova, but what it is that has been done in Alaska, 
working with the benefits of our national labs and working with 
those here in the state to really be pioneering and innovating 
in the area of energy.
    I am pleased to be able to bring to Cordova my friend and 
my Ranking Member on the Committee, Senator Cantwell. This is 
her second visit to the state now in the past 18 months.
    We had an opportunity to go to Bethel not too many months 
ago with Secretary Moniz and several other colleagues looking 
at a different aspect of energy, but the focus on technology 
innovation is something that we share great interest in.
    We started off this energy trip by stopping in Seattle 
yesterday, and Senator Cantwell hosted as we toured the Bullitt 
Center, the world's greenest commercial building. When you 
think about innovation in building technologies and how so much 
can be done in a manner that you barely even notice it, looking 
at what the Bullitt Center has done is incredibly 
inspirational.
    We also had an opportunity to visit McKinstry where we 
talked about workforce training, cybersecurity efforts and just 
the collaborative efforts that go on with cybersecurity, 
efficiency through integrated systems, as we look at smart 
buildings and how we can better monitor them.
    Then we capped off the morning with a discussion with Bill 
Gates about the future of energy innovation.
    It was a pretty inspirational morning, and I really thank 
Senator Cantwell for putting that together. But it is a great 
opportunity, I think then, to take those discussions and what 
we learned yesterday about that energy for the future and then 
bring it back home, on the ground.
    What does it mean? Particularly to high-cost energy states, 
like Alaska, but where we have extraordinary opportunity with 
our renewables, where we have incredible innovation that is 
going on in small ways, in very discreet ways that perhaps do 
not make the front page of anybody's newspaper except, perhaps, 
the Cordova Times. But also how we can help, really help build 
that out, because I think we recognize that innovation is 
almost a necessity here in Alaska.
    Self-reliance, ingenuity--these are hallmarks of the 
people. We think about how our communities are so isolated. Our 
energy infrastructure in this state is effectively the 
interconnected grid that runs from the Kenai Peninsula up to 
Fairbanks. But so many of our communities are isolated by our 
geography, our distance, and have to rely on local generation 
to supply power.
    In so many of these communities, you have situations where 
you have the fuel barge that comes in once, twice a year. 
Mayor, in your community, and many in the AVEC region, that is 
your reality. How you deal with that in cold, remote 
environments is very, very difficult. Recognizing that so many 
of our isolated communities have partnered with the state and 
the Federal Government to integrate renewable resources into 
their microgrids in an effort to provide greater sustainability 
and, of course, greater affordability is so important.
    We are going to hear from a great panel this morning. Mayor 
Koplin will talk to us about what it is that we have seen here 
in Cordova and how that level of innovation has made a 
difference beyond just this community.
    We also welcome this morning Gwen Holdmann, who is the 
Director of the Alaska Center for Energy and Power (ACEP). Some 
of the innovative ideas that we have seen coming out of ACEP 
are really, again, very inspirational.
    Meera Kohler, who is well known here in Cordova and around 
the state, is the Chief Executive Officer of AVEC, the Alaska 
Village Electric Cooperative.
    It is not too often that you have a Senate Energy Committee 
hearing where you have witnesses who have a six pack of beer in 
front of them.
    [Laughter.]
    Geoff Larson, who is the CEO and Co-Founder of the Alaskan 
Brewing Company, will provide, I think, a very important lesson 
to us in terms of the types of innovation that we can see that 
really do help our small businesses become more than small 
businesses. The leadership that they have embraced down in 
Juneau is really quite remarkable.
    Dr. Abraham Ellis, our out-of-town or out-of-state visitor 
today, we welcome you. Dr. Ellis is Principal Technical Staff 
for the Sandia National Laboratories and his focus is on 
renewable integration in remote areas.
    So again, we think about the innovation and how innovation 
is best facilitated when you have collaboration at different 
levels, whether it is the local, the state, the tribal, the 
federal. This is how we can be helpful at the federal level to 
try to help build out those frameworks.
    We have a couple things going on in Washington that perhaps 
you have not heard about because the Washington news has been 
preoccupied by other things. On Thursday morning, there was a 
very important hearing in Washington and it was not the Senate 
Intelligence Committee, it was our Energy Committee, that was 
not talking about the former Director of the FBI, but we were 
talking about innovation in energy and how it drives down 
costs. It was, I thought, a great, exciting, dynamic hearing. I 
think more people should have plugged into that one for, 
really, direction and inspiration in terms of what can be had 
to help advance this country.
    Senator Cantwell and I continue to work on our energy bill 
that we have been working on now for about a year and a half, 
maybe two years. We have a partnership in energy that, I think, 
is recognized in Washington as being good, constructive, 
enduring and persistent and we will persist with our efforts to 
get energy updates that will help our communities, our country, 
for the long haul.
    So, Dr. Ellis, I appreciate you and all the members of our 
panel being here. I want to recognize those here at the Cordova 
Center that have helped to facilitate this hearing this 
morning--Cathy Sherman, Mimi Briggs and Jason Gabrielson, as 
well as the Energy Committee staff that have helped to 
facilitate it.
    Senator Cantwell, I cannot thank you enough for being here. 
I appreciate not only your engagement on this issue here this 
morning but the bigger aspects of energy policy that together 
we are working to help advance.
    So, welcome. The floor is yours before we turn it over to 
our panel of distinguished witnesses.

               STATEMENT OF HON. MARIA CANTWELL, 
                  U.S. SENATOR FROM WASHINGTON

    Senator Cantwell. Well, Madam Chair, thank you so much for 
this invitation to come to Cordova. I have to be honest, when 
we had our hearing in Washington, DC, and the Mayor promised 
Copper River salmon, he had my attention.
    [Laughter.]
    My ears perked up. I noticed last night when we got in, we 
almost had to speak in code to get it on the menu.
    [Laughter.]
    I thought when we told the waitress and she, kind of, 
looked over toward the Mayor, she was like, oh yes, it is on 
the menu, okay.
    [Laughter.]
    So, thank you, Mayor.
    [Laughter.]
    For delivering it, and for the hospitality. Cordova is well 
known in the Puget Sound region and we appreciate the 
relationship between our fishing industry and so many aspects 
of the economy.
    I am sure Mr. Larson is going to tell me about how he buys 
hops from the Yakima Valley and many, many other things.
    [Laughter.]
    Our states are tied together and they have been 
historically, and we continue to work together on that. I look 
very much forward to listening to the panelists and hearing 
about these issues this morning.
    I want to thank you, Madam Chairman, for coming to Seattle 
yesterday, to tour the facilities at McKinstry and the Bullitt 
Center. I think we agree that the next steps in energy system 
delivery improvements need to be made so that we can continue 
to drive down costs to our consumers and make our businesses 
competitive.
    I would have to say one of the highlights of my day 
yesterday was watching Senator Murkowski show a picture to Bill 
Gates of how to grow lettuce in a small container in her 
office, as is done by so many villagers all across Alaska in 
the school system. I just thought that was so great because we 
had just heard this global picture about energy and I think she 
was doing a fantastic job of bringing it right back down to 
today, because what we are able to deliver today really matters 
to the people of Alaska.
    I thought you would have been proud of her and proud of her 
focus on these issues, just as you should be, as it relates to 
the Energy Policy Modernization Act that we have been working 
on. As she mentioned, we were successful at getting it out of 
the Senate but did not quite get the full attention of our 
House colleagues. We are now trying to get their full attention 
as they have a little more time. But let me assure you there is 
no deterrent here when it comes to Senator Murkowski's 
dedication to this issue. She and I, with her taking the lead, 
marched across the Capitol one night at ten o'clock to get 
something out to staff and house members, trying to get their 
attention. So, she will go the extra mile, and I thank her for 
that.
    I thank all of our witnesses today for their contribution 
to this discussion.
    You know, today's topic about microgrids and hybrid energy 
systems is really, really important, and the one thing I hope 
that Alaskans take away from this hearing is how important it 
is that you continue to pioneer in this area.
    There are so many important things to discuss, but clearly 
the concept of ``necessity is the mother of invention'' comes 
to mind here, that Alaskans are dealing with this issue of 
anywhere from $.50 per kilowatt to $1.50 kilowatt hour in rural 
villages. So 5-15 times the average of what a consumer is 
paying in the lower 48 really does drive the level of 
discussion and attention to detail here on this issue.
    By making sure that Alaskans continue to look at ways to 
diversify all of the very vulnerable fluctuations in oil prices 
is something, I think, we are going to hear about, as well as 
reliable hybrid energy systems with renewable microgrids, 
coupled with diesel and renewable sources.
    I can't wait to hear how all of these things--hydro, wind, 
geothermal--are working together to help Alaskans maximize and 
create opportunities.
    I know that Alaskans are global leaders, not only in self-
reliance, but also in microgrid technology. This is something 
that would have huge applications all around the globe, and you 
are continuing to pioneer here. Alaska is already home to 200 
microgrids, 70 of which are powered by renewable sources, 
including hydropower, biomass, geothermal, wind and solar. That 
is 12 percent of the world's renewable hybrid microgrid 
systems, right here in Alaska.
    You really are pioneering something that will pay dividends 
for all of us in the future--smarter, cheaper controls, 
integration of technologies, microgrid solutions--not just for 
remote communities, but for hospitals, for schools, for our 
challenges as we look at reliability.
    And the Chair mentioned this issue a little bit, of 
cybersecurity. We definitely had a discussion yesterday about 
that, about what we need to do to upgrade the entire grid 
system and critical infrastructure, like pipelines, for the 
potential of cybersecurity attacks. This isn't something that 
might happen tomorrow. This is something that is happening 
every single day and our utilities and others are fighting 
against that.
    When you think about it, the application of microgrids and 
the technology of microgrids is another example of how you 
maintain services if those kinds of attacks happen, the 
microgrids can build some insulation and some security layers 
into the system. So I just encourage you to continue to pioneer 
this technology.
    Regional energy solutions should be a priority for our 
nation. And the reason that is so clear to me here in Alaska 
today is because these solutions help build a robust system 
that takes advantage of our national labs, and I am so glad our 
labs are here today, together with academia and the private 
sector. These are the people who are going to take these ideas 
and commit them to real life action and we need to continue to 
make progress on them.
    I have been a strong proponent of performance metrics for 
microgrids and investing in matching federal dollars to help 
increase the grid resilience. We were proud to work together, 
as my colleague said, on the energy bill to tailor the needs to 
places like Cordova, and also places like Anchorage and 
Seattle, so that the interconnectedness is there. But we are 
also exposed to natural disasters, forget cybersecurity for a 
minute. Natural disasters can happen and the notion is that we 
need to have a strategy. I think both Alaska and Washington get 
this very clearly, about how the grid can be disrupted and what 
we would need to do to set up a system to help build more 
resiliency for our states. I look forward to hearing from all 
the witnesses here and to hear the input and suggestions as we 
continue to deal with this issue at the national level.
    I would be remiss if I didn't mention--I do not get to stay 
for this big celebration tonight, but maybe in the future I 
could come back. I certainly support the efforts of science in 
the marine area that is going strong here in Cordova. As a 
member of the Commerce Committee, I'm focused on the upcoming 
reauthorization of Magnuson-Stevens. It is very important that 
we continue to have great science applied to our fisheries, and 
I look forward to working with the community on those issues.
    I feel so excited to hear from our witnesses today. Again, 
Mayor, thank you for delivering. I see that might also be a 
parting gift that I will definitely take----
    [Laughter.]
    I thought it was only one. I thought we were going to have 
to fight over it.
    [Laughter.]
    Okay, I am happy now.
    [Laughter.]
    Thank you, Madam Chair.
    The Chairman. Thank you, Senator Cantwell.
    It is always about the fish.
    [Laughter.]
    But just thank you, thank you for being here and for your 
leadership on this and the recognition. I think it is important 
for those who are attending the hearing this morning and those 
who will later read the record, to understand how much Alaska 
is pioneering.
    When you repeated the statistic, 12 percent of the hybrid 
microgrids in the world are here in our state--sometimes I 
think we do not think that we are being that innovative or 
pioneering. We just figure things out. And sometimes we say, 
gosh, we just did that with a little duct tape and made it 
happen. But I think what we need to be reminded of is that 
others are looking. They are watching. They are trying to learn 
from us. And that, hopefully, is very empowering to each of 
you. It certainly is to me.
    Mayor Koplin, we are going to ask you to lead off the 
panel. Mayor Koplin, of the City of Cordova. He will be 
followed by Dr. Abraham Ellis, who is the Principal Technical 
Staff at Sandia National Laboratories; Ms. Gwen Holdmann, who 
is the Director for Alaska Center for Energy and Power; Meera 
Kohler, Chief Executive Officer for Alaska Village Electric 
Cooperative; and Mr. Geoff Larson, CEO and Co-Founder of the 
Alaskan Brewing Company.
    For those who are not familiar with how a Senate hearing is 
conducted, we ask each of our witnesses to provide their oral 
testimony, trying to limit it to about five minutes or so. Your 
full statements will be included as part of the record. When 
each of you have concluded your remarks, Senator Cantwell and I 
will begin a series of questions, going back and forth.
    We will allow for the record to be kept open so that if you 
would like to supplement, or if we have additional questions, 
it does become part of the full Committee record. So even 
though we are not conducting this in Washington, DC, it is 
being recorded and transcribed as part of the full Committee 
record for the Energy and Natural Resources Committee.
    Mayor, thank you for having us in your beautiful community 
and thank you for your leadership in so many different areas.

STATEMENT OF HON. CLAY KOPLIN, MAYOR, CITY OF CORDOVA, ALASKA, 
          AND CEO, CORDOVA ELECTRIC COOPERATIVE, INC.

    Mr. Koplin. Thank you, Senator Murkowski and Ranking Member 
Cantwell. It's good to have you here this morning.
    As Senator Murkowski mentioned I am Clay Koplin, Mayor of 
Cordova, Alaska, and CEO of Cordova Electric Cooperative (CEC). 
We welcome you to the City of Cordova and the ancestral 
homeland of the Native village of Eyak. We're so pleased to 
engage in this exciting conversation.
    Cordova really is an ideal location for having this 
discussion about street-smart innovation, resilient microgrids 
and hybrid energy systems that characterize many of our more 
fortunate Alaskan utilities and the communities they serve. We 
really do excel at innovating, at marshalling lean resources 
and integrating unlikely and seemingly incompatible 
technologies into our energy systems, often improving the 
products and the applications in the process.
    My primary focus this morning is going to be on the 
innovation piece, kind of with the backdrop or context of CEC's 
hybrid microgrid system.
    So how can we accelerate innovation and improve the 
development and operation of microgrids and hybrid energy 
systems? I think it revolves around three opportunities. One, 
we need to increase the prominence and the participation of the 
innovators on the low end. And please carry that message back 
to Bill Gates. I've read through all their materials and 
they're, kind of, missing the little guys. Continue to fund the 
national programs and the departments in our national 
laboratories and their important roles, and bring industry and 
government closer to the problem, like you're doing today 
actually, before the solutions are developed so that we, as the 
end users and innovators, can weigh in and be a part of that 
process as it's happening.
    Two weeks ago, CEC and Meera Kohler co-hosted a Canadian 
off-grid utility association's biennial meeting right here in 
Cordova. Gwen Holdmann also attended that event, as did an 
engineer from Greenland's utility, Nukissiorfiit. And on Gwen's 
recommendation to the U.S. State Department, I was able to 
travel to Greenland last October and share some of the best 
practices that we've developed right here in Cordova. They're 
now operating one of their hydro projects at well above its 
rated capacity because we figured out how, with our 100 percent 
underground power lines, to leverage our good power factory 
here in town to get more out of our equipment with a 
manufacturer's concurrence and warranty. So we shared that with 
them.
    Alex Hagmueller, one of the neighbors right down the street 
from me in Cordova, who was born and raised here, grew up 
working in local machine shops and commercial fishing before he 
decided to go back to Oregon State University and pursue his 
mechanical engineering degree. And while he was there he joined 
his friend, Max Ginsberg, and founded AquaHarmonics in 
designing a wave energy generator in their garage, out-of-
pocket, and ultimately won the Department of Energy's $1.4 
million Wave Energy Prize.
    Alex is a product of his environment, and we need to 
support and strengthen these rural ecosystems and their role in 
innovating, just as the Wright Brothers did from their bicycle 
shop, and as Hewlett and Packard, and Jobs and Wozniak did from 
their garages.
    In 2004 we had a submarine cable that goes north out of 
town here to our Humpback Creek project that was damaged in a 
weather event. We used a car battery and a hand-held voltage 
meter to pinpoint that fault in a three-and-a-half-mile long 
cable to within ten feet, and we repurposed and recycled wire 
reels and used local boats and divers and careful logistical 
planning to cut and slice and repair that cable and put it back 
in service. And it's still operating today--under $60,000, less 
than three months, and a conventional repair would have easily 
cost $1 million and taken over a year, resources we just don't 
have.
    So how does this innovation happen and what's the end 
result? The right people in the right place at the right time 
with the right partners. We're really fortunate that many of 
our staff at Cordova Electric were born and raised here in 
Cordova, went elsewhere to get their technical skills and their 
educations and then they brought it home. That's where our 
capacity and our leadership on the forefront of this energy 
transformation is derived from. Our core strength is our people 
and what they do and how they do it. So we need to build on 
that momentum and use the lessons learned to benefit 
communities and industries across the country more broadly.
    We at CEC continue our march toward a full smart grid 
capability with 100 percent local renewable sourcing of our 
local energy supplies. This will someday allow distributed 
generation, energy storage, home appliances, electric vehicles, 
businesses and industrial equipment and lighting to 
electronically and automatically communicate with our own high 
capacity energy supply system. That's really what smart grid is 
going to look like, and that's how we can allow renewable 
energy to be deployed when its available and to charge those 
storage devices and then discharge and kind of go into 
hibernation when it's not available. The whole system becomes 
flexible and interactive based on the technology platforms that 
are being developed.
    The National Renewable Energy Lab recently met with the 
Native village of Eyak. I'm glad to see Daryl and the Tribal 
Chairman here. They came to Cordova, and after a quick dialog 
with the Native village of Eyak, said, you know what? You are 
not a candidate for technical support. You are a candidate for 
a best practices hearing on our part. They came out here and 
spent four days picking our brains and trying to figure out 
what's the secret sauce that you have going here? And a lot of 
it just boils down to really working together within the 
community here, as organizations, to move the ball forward.
    One of those two staff decided she wants to do her 
sabbatical here in Cordova, and I hope she can. Both of them 
looked around and said, really, this can be a National Lab 
outpost--you have the infrastructure, and human and 
organizational capacity to really contribute. So we need the 
technology outpost like that in Alaska where we can return at 
least as much benefit to the partners and the industries and 
the governments that we work with as we derive from it.
    Alaskans face such a challenging environment with such 
limited resources, similar to Washington, as you mentioned, in 
many ways, which is why we have to collaborate. It's why I sit 
on the ACEP's Board of Directors. It's why I work with Meera 
with the Statewide Utility Managers group and join her in 
sitting on as many national organizations, Board of 
Trusteeships and places as we can to bring that technology back 
and learn how we can collaborate better.
    The energy storage project that we're currently working on 
with the Alaska Center for Energy and Power and Sandia National 
Labs is really exciting and it's a perfect example of how we 
marry that high technology to that, kind of, street-smart 
innovation and take us all to a better place.
    When Rob Royce, who is out in the audience here with ABB, 
talked to me a few months ago about Cordova maybe being a smart 
grid demonstration city for ABB, I got really excited but we 
have to figure out how to make that happen. We have to give Rob 
the tools to be able to go back to his corporate leadership and 
say, hey, not only does Cordova have the capacity to pull 
something like this off, but you have the support at the state 
and federal level to stand behind this and make something cool 
happen and move us all forward.
    I know ABB will walk away a better company, with better 
products and better applications than they came here with, but 
we just have that same challenge of showing them and getting 
them visibility to what we do and how we do it.
    Thank you for this opportunity to testify. I really 
encourage any questions you have to ask here at the end or 
through the questions for the record and strongly encourage you 
to support the investments and partnerships in Alaska and 
Cordova and other organizations within the state where we've 
already established a really good foundation from which we can 
build a bright future.
    Thank you.
    [The prepared statement of Mr. Koplin follows:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]   
   
    
    The Chairman. Thank you, Clay. It is good to be in this 
technology outpost. I never really thought about it that way, 
but here we are in the technology outpost of Cordova, Alaska.
    Dr. Ellis, tell us how the national labs fit in with so 
much of what is going on. I think you had a great segue there 
from the Mayor.

  STATEMENT OF DR. ABRAHAM ELLIS, PRINCIPAL TECHNICAL STAFF, 
                  SANDIA NATIONAL LABORATORIES

    Dr. Ellis. Absolutely.
    Let me start with saying good morning and thank you, 
Chairman Murkowski and Ranking Member Cantwell, for the 
invitation to share my perspectives about this very important 
topic of microgrids and hybrid energy systems.
    I'd like to commend the Committee for the location of 
choice. I'm looking forward to tasting the good salmon here. 
Haven't had a chance yet, but the reputation precedes you here, 
so that's awesome.
    Cordova certainly exemplifies, as the Mayor says, the 
magnitude of the challenge that we have to deal with to meet 
the energy needs of remote communities but also exemplifies 
what is possible when the right stakeholders come together to 
work on a sustainable solution.
    As we learn more about Cordova's success stories today, I 
think it's very important for all of us to remember that many 
communities here in Alaska and across the world have struggled 
with meeting their energy needs every day.
    Today what I'd like to do is convey three messages. The 
first one is that microgrids represent still, a very complex 
technical challenge with significant unresolved technical 
questions that really merit additional research and 
development. Second, I'd like to say that microgrids have been 
and will continue to be a really effective incubator for new 
technologies that are useful for the grid. And third, 
advancements of microgrids not only support the needs of these 
remote communities and island communities, but they are also an 
important ingredient to national energy resilience and they're 
also drivers for grid modernization.
    Let me share with you a little bit of my own personal and 
professional experience with microgrids. I grew up in a small 
town in Panama, actually, isolated from the grid, where 
electricity evolved there in that town in much the same way as 
I imagined it did here in Cordova. It started with a few diesel 
generators in stores and coffee processing plants. Eventually 
we added a hybrid electric plant and a small distribution grid.
    The benefits for us, as you can imagine, were very broad 
and immediate. However, even though electricity was, you know, 
expensive and unreliable, it was very welcome in the community. 
It was very difficult. We struggled, actually, with maintaining 
the system, keeping it operational and then planning for growth 
for the future, always a challenge.
    My first job, that's 25 years ago or so, promoted 
sustainable rural electrification in Latin America. There I met 
some people that actually worked with Meera Kohler until now, 
so that's a small world, isn't it? And this is like Guatemala 
and Southern Mexico.
    Even though the cost was very high, even then, it made 
very, very, good sense to demonstrate the use of solar and wind 
power for critical applications in the community like water 
pumping and refrigeration. A few of the larger communities 
chose to work with us to add renewables and storage to their 
diesel plants, which resulted, you know, back then with some of 
the earliest hybrid systems in operation, successfully.
    These early efforts, some of them led by Sandia and other 
national laboratories, demonstrated the feasibility of 
drastically reducing diesel fuel consumption while keeping the 
lights on for longer hours. We also documented some of the key 
challenges that really makes sustainability and replicability 
difficult. And the first one was initial cost. It continues to 
be an issue today, even though the benefits in the long run are 
greater, the initial cost is a huge barrier. Second is 
technology readiness. It was problematic at that time. Off-the-
shelf electronic equipment, things like storage systems, 
degraded and sometimes failed faster than expected due to the 
very difficult operating conditions, high humidity, temperature 
swings, things like that. Possibly the most challenging issue 
was institutional and human factors, actually. That was an eye-
opening lesson learned for me. These included things like the 
lack of business models, poor access to technical expertise and 
support, financing, all of these complicated by very difficult 
logistics in remote communities.
    I am sure that my colleagues in Alaska will attest to the 
fact that these difficulties that we encountered so many years 
ago are still very relevant today. Significant progress is 
being made; however, here in Alaska, they are supported by 
entities like the Alaska Center for Energy and Power, working 
hand-in-hand with communities and utilities. Because the cost 
of remote energy, as Senator Cantwell said, is high in these 
communities, it makes good sense to consider new technologies 
that may not be economically viable in other places.
    A similar set of conditions is driving the adoption of 
microgrid and hybrid system technologies in places like Hawaii, 
DoD forward operating bases and other remote mission critical 
installations.
    Here I want to emphasize that remote microgrid developments 
are also paving the way for modern national grid advancements. 
Fundamentally, the same technologies used in remote microgrids 
are being deployed within the larger interconnected power 
system. In that context those technologies are delivering cost 
savings for consumers. They're also delivering improved energy 
resilience for applications like transportation, communications 
and so on.
    There is a lot to be done still. Microgrids can be more 
reliable, more affordable, more scalable. Advanced microgrids, 
as the Mayor said, can help us integrate higher quantities of 
renewable energy and distributed energy resources and can 
contribute to that secure and resilient national grid.
    To achieve this vision, there is a need to further develop 
and, you know, push forward, the underlying technical or the 
underlying technologies such as energy storage and power 
electronics. We still have work to do there. Controllers and 
protection systems are particularly important in this setting.
    We also need better methods, models and tools to support 
optimal design and operation of these systems. And we also need 
those kinds of tools to guide investment and even policy 
decisions.
    Finally, more work is needed to shepherd the orderly 
evolution, and this is a big one, of technical standards that 
will allow microgrid components to interact safely and securely 
with each other with utility systems and with energy markets of 
the future. This work involves complex, as I said, technical, 
institutional and human factors.
    The Department of Energy and National Laboratories are 
playing a critical role in this space. It makes a lot of sense 
as this is a challenge of national importance.
    In closing, let me reiterate remote microgrid technologies 
for the benefit of Alaskans also has the potential to enable a 
more modern, secure and resilient national grid. This Committee 
is very aware of the impact that investments in energy 
technologies have had over time. One example that is often 
brought up is Sandia's advanced drilling technology, which has 
been reviewed by this Committee in the past. In my opinion, 
microgrid research and development will have an even greater 
impact nationally.
    With that, I'll say thank you very much, again, for your 
attention, and I look forward to your questions.
    [The prepared statement of Dr. Ellis follows:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    
    
      
    The Chairman. Thank you, Dr. Ellis.
    Ms. Holdmann. Welcome, Gwen.

STATEMENT OF GWEN HOLDMANN, DIRECTOR, ALASKA CENTER FOR ENERGY 
           AND POWER, UNIVERSITY OF ALASKA FAIRBANKS

    Ms. Holdmann. Thank you.
    The Chairman. You are the only one that I know that came to 
the hearing today by sailboat.
    Ms. Holdmann. That's right.
    [Laughter.]
    Thank you.
    Thank you, Chairman Murkowski and Ranking Member Cantwell, 
for the opportunity to be here this morning.
    I direct the Alaska Center for Energy and Power, and we 
play this unique role. We're based at the University of Alaska 
Fairbanks, but we work really closely hand-in-hand with our 
communities and utilities to make sure the kinds of 
technologies, that they're aware of these next generation 
emerging technologies, and we're working with them to try to 
make sure that they are adapted in ways that are going to meet 
the kinds of goals of reducing energy cost and increasing 
reliability and resiliency of our small grids here. On the 
other hand, we're working with developers and industry to try 
to make sure that their technologies are developed in such a 
way that they are going to be appropriate and are going to be 
successful and resource a small grid environment. We have a 
laboratory at the University of Alaska Fairbanks, so they do a 
lot of testing of technology before we try to move it into the 
communities where it can be deployed and taken advantage of by 
our utilities and our residents.
    You know, I really appreciate the fact that Senator 
Murkowski has done such an excellent job in advocating for 
Alaska's excellence in terms of microgrid technologies. I think 
it's been mentioned here several times that Alaska does have 
more microgrids than basically anywhere else in the world that 
has grid-scale renewables connected to them.
    One of the things I want to highlight is that a lot of that 
expertise that Alaska has in terms of developing these sorts of 
systems, really resides within our utility industry here in 
Alaska. And so, I'm really happy to be here with both Clay 
Koplin and Meera Kohler, who are really two of the people that, 
I think, are really leaders in the way that our utilities are 
creatively adapting new technologies and new ideas and really 
looking for what the energy grid of the future is going to look 
like, what the systems of the future are going to look like.
    I also appreciate that Senator Cantwell pointed out the 
fact that we're not just talking about these unique, small 
situations in Alaska, but that this really does represent the 
way that we are going to transform the electric grid and the 
rest of this country in the future too, which will be around 
greater integration of renewables, more distributed generation 
and just trying to form these microgrids that enable more 
resilient and reliable grid infrastructure across the country. 
I do agree with you that Alaska is really that place where 
we're pioneering a lot of those technologies that will get us 
there.
    The world has been more and more recognizing that Alaska is 
doing some unique things here, that we're really pushing these 
levels of renewable energy generation like Meera is to a level 
that would make more utility operators pretty nervous. And 
they're doing that to these very, you know, kind of important 
strategies not just incorporating energy storage, but also 
demand response, looking at smart grid enabling technologies. 
There's a lot of things going on here that are quite 
interesting.
    We have the Arctic Remote Energy Networks Academy. We're 
bringing people from all over the Arctic together to do 
knowledge sharing about these sorts of microgrids. We're hoping 
to expand that to a more global level, but we have people 
coming from Greenland and Canada and Russia and other places in 
the Arctic region that can benefit from these sorts of 
solutions. They're coming to Fairbanks in two weeks and then 
we're taking them to Kotzebue and on to Nome in that particular 
case. But those are examples of where Alaskans can share that 
expertise.
    I'm also really excited to talk about some positive 
examples for state, local and federal collaboration. In 
particular, the last time that you had a hearing in Bethel, I 
talked about the need for an Alaska hub for energy innovation 
and deployment--something that we were really hoping to work 
with the Department of Energy on. I'm really excited to tell 
you that that has moved forward, not with the Department of 
Energy, although we hope to bring them on as a partner in the 
future, but with the Office of Naval Research, who has invested 
in Alaska to develop an energy innovation ecosystem here that 
goes all the way from our STEM, K through 12 education, through 
the development of an Alaska Network for Energy Education and 
Employment through REAP, all the way through funding our energy 
accelerator here, or our small business accelerator, the Launch 
Alaska program through testing and development of new energy 
systems at the university and then deploying those in the 
field.
    That's a program that we're actually spinning up within the 
next few months, and we'll be working on for the next three 
years. That will give us a chance, for example, to be working 
with Meera on a particular system that she's identified as a 
need for her community which is the small amounts of energy 
storage, a grid bridging system that will enable her to, in an 
economical way, integrate both more renewables or just save 
fuel by switching more efficiently between smaller and larger 
diesel generators which are still going to be the backbone of 
generation of rural Alaska for some time to come. So that 
funding is allowing us to seek external partners to, kind of, 
find those perfect solutions moving forward.
    My colleague here from Sandia National Lab, Dr. Ellis, also 
mentioned this project that we have through the Office of 
Electricity. This is a great example, from my perspective, of 
state and local collaboration because the Alaska Center for 
Energy and Power and Cordova Electric Cooperative, we 
identified this potential opportunity for energy storage here 
around a bit of a unique paradigm for how that would be 
integrated here, and we pulled in expertise through the Clean 
Energy SAFE Alliance and requested expertise from, 
specifically, from Sandia National Laboratory.
    The Department of Energy responded to that request. The 
project is led by, and we are setting the context locally here, 
but Sandia National Lab is providing critical expertise to make 
that project happen. Those are the kinds of ways that we want 
to be partnering with our national labs. I think it's a really 
great story.
    Similarly, we have a lot of regional partnerships going on. 
We worked really closely with the University of Washington on 
the Northwest National Marine Renewable Energy Center (NNMREC). 
So we have three universities there, the University of Alaska 
Fairbanks, UW and then Oregon State University that work with 
the Department of Energy (DOE) on this regional collaboration 
around hydrokinetic technologies. And we appreciate both of 
your long-term support for ocean and river and instream energy 
solutions.
    I'm currently serving on the board of the University of 
Washington Clean Energy Institute (CEI). I'm the only person 
from another university that's serving in that role. And so, 
that's another way that we're working really closely together.
    We have a program that we call the Center for Microgrid 
Technologies Commercialization, and it's a partnership between 
the Economic Development Administration and the University of 
Alaska. And we actually host the competition for companies that 
have microgrid enabling technologies to test their technology 
in our lab and work with our engineers with the idea of pushing 
it out into communities in Alaska.
    So we had our first round, our first competition, and we 
just announced the winners a few weeks ago. And actually, UET, 
UniEnergy Technologies, a battery manufacturer from your 
region, from Mukilteo--am I saying that correctly?
    Senator Cantwell. Yes.
    Ms. Holdmann. --is actually the winner of that particular 
award. We're going to be bringing their system up here to 
Alaska, testing it in our laboratory. I actually hope that 
someday we might see that system the next time you come back, 
actually operating here in Cordova and providing that storage 
solution that we've been working with Sandia to identify right 
now.
    That's really all I have to say. I apologize for going a 
little bit over, but this need for driving partnerships, I 
think, is really important. I'm really excited to hear that 
you're still moving forward with this concept of an energy bill 
because I think that we do need an update to create that 
framework at the national level, but really for promoting these 
partnerships and really pushing the understanding of what is 
needed to the lowest common denominator where that's our 
communities and our state, that we can be pulling in expertise 
from the Federal Government. That's the type of framework that 
we're excited to work around.
    So, thank you.
    [The prepared statement of Ms. Holdmann follows:]
    
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    
       
    The Chairman. Well said, great examples of partnership 
there.
    Meera, wonderful to have you here.

 STATEMENT OF MEERA KOHLER, PRESIDENT AND CEO, ALASKA VILLAGE 
                   ELECTRIC COOPERATIVE, INC.

    Ms. . Thank you.
    I do appreciate the opportunity to be here. Under your 
tutelage, you have really pioneered, I think, a support system 
for rural Alaska that is second to none.
    So welcome to Cordova, both to the Ranking Member and to 
the Chairman. I am going to take the privilege of saying that, 
because Cordova was my home many years ago. It was where I 
immigrated--I come from India; I came from New Delhi and 
literally moved here.
    [Laughter.]
    So Cordova absorbed me. They embraced me, they made me a 
part of them, so it will always be home. Every time I come back 
here, my heart is just light with joy at being back here.
    But I have been in the electric utility industry since 
1979. Started out here in Cordova and have been the CEO of 
three Alaskan utilities, a very small one in Western Alaska at 
Manokotak, and one of the largest ones in Alaska which is 
Municipal Light and Power which is the municipal utility 
serving Anchorage, and now Alaska Village Electric Cooperative 
(AVEC). I've been at AVEC for 17 years.
    So my heart is very much in rural Alaska, and I have always 
felt that rural Alaska has something to offer the entire world. 
And we need to make it a quid pro quo situation.
    A little bit about AVEC. We are a co-op, non-profit formed 
in 1967. We now serve 58 communities. The latest community that 
we added, actually, is about 200 miles Southeast of here. We're 
in Napakiak now. I now have 1,000 miles between my farthest 
West and my farthest East community and 800 miles North to 
South, so it's a very vast area. These communities are very 
small, average population is about 400-450 people, and the 
average load in one of these communities is essentially about 
half of a grocery store at Anchorage. So where I shop basically 
equips two of my villages rolled together in terms of 
electricity usage.
    Despite the fact that Alaska is very energy rich; we have a 
lot of natural resources but we're actually a very energy-poor 
state. We sell a total of about 6.3 billion kilowatt hours in 
Alaska which is half, less than half, of what Sacramento sells 
in California. That's one community that sells twice as much as 
the entire State of Alaska.
    So that's a very stark difference, and what it tells you is 
that our retail energy is very expensive. In our villages, I'm 
very proud to say, our best rate is $.24 a kilowatt-hour in 
Bethel and our highest is about $.68 a kilowatt-hour where we 
have to fly fuel in.
    But what's happening in these villages with such 
communities are being held hostage to very high-cost energy. 
And it's not even the electricity that's so expensive, it's the 
heat and transportation. That's what eats their lunch, if you 
will. So we really are totally focused on solutions for our 
communities.
    We do operate 50 microgrids and we serve those 58 
communities. What we have been trying to do is basically create 
the regional energy grid that Senator Cantwell mentioned 
earlier. We shut down power plants. We've shut about six power 
plants in the last 10 years or so and we are now serving those 
communities through interties. And actually, I have worked with 
Gwen on HVDC at a micro level to try to connect more villages.
    The cost of building capacity in rural Alaska is extremely 
high. It costs about $17,000 per service to establish utility 
service, which is five times what it is in the lower 48, so 
that puts into perspective what the costs are that we grapple 
with.
    We have collaborated to set up some pretty unique 
microgrids. Gwen mentioned that we're able to do very high 
displacements in our villages. We have a few communities where 
we are displacing almost 40 percent of the diesel used for 
generation with wind, and that's because we have highly 
intelligent dispatch that we've actually created ourselves.
    We have on staff, really, some of the world's most 
ingenious minds, I think. And so, I really welcome the national 
labs working with us to basically partner on solutions that are 
going to allow even higher penetrations of wind and of solar.
    I was at a breakfast meeting with Senator Murkowski and Jay 
Faison at ACCF, which was fascinating, just a few weeks ago. 
And I, actually just before that, a month before, had been in 
conversation with Oklo which is developing the micro-nuclear 
project. I think that those are going to be what turns Alaska 
around.
    I've always had this concept in my mind of the bubble gum 
machine with all these little bubble gum balls in it but 
contained a little nuclear fission material inside of it and 
creates clean, emission-free, long-lasting energy for very low 
cost. I'd like to see resources going into that concept.
    We're working with Gwen and ONR on microgrid optimization 
through the grid bridge system. We believe that it truly is 
going to allow us to go diesel-soft in many of our communities.
    We have to understand that we can be a test bed for 
emerging technologies. We have to have something that's more 
robust and that's street-ready because we can't afford to be in 
a situation where a community goes black because a nascent 
technology doesn't work. That's a life, health and safety 
issue. If we have a multi-day power outage in one of our remote 
communities, you're going to have people that are facing life 
and death situations as a result of those outages. So we can't 
afford to have that happen.
    I just want to put a little plug in for the fact that, you 
know, you're hearing today about the urban utilities in 
Anchorage that are going to smart meters and they're so proud 
of it. Well, hell, we've had those for more than 10 years.
    [Laughter.]
    Every one of our villages, we have smart meters and we have 
virtual data and we have the ability to do innovative things.
    I really appreciate you coming here to listen to us in our 
home and understand how unique we are and how we really need 
your support to help us to move further along. I think we can 
go to some wonderful places.
    So thank you again. I appreciate the opportunity to present 
to you.
    [The prepared statement of Ms. Kohler follows:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    
       
    The Chairman. Great, Meera, we really appreciate that.
    Okay, Geoff, bring it home and explain how beer fits into 
energy.
    [Laughter.]
    Geoff Larson.
    Ms. Kohler. And why doesn't he have a beer for each one of 
us? That's what----
    [Laughter.]
    The Chairman. Meera, it's not noon.
    [Laughter.]
    Ms. Kohler. It is somewhere.
    [Laughter.]

 STATEMENT OF GEOFF LARSON, CO-FOUNDER AND PRESIDENT, ALASKAN 
                        BREWING COMPANY

    Mr. Larson. Thank you, Senator Murkowski, Ranking Member 
Senator Cantwell. I am intimidated by this panel because----
    The Chairman. So are we.
    [Laughter.]
    Mr. Larson. ----because they represent communities and they 
represent a broader, out-of-self type of responsibility. 
Interestingly enough, beer has been one of the oldest 
industries in the world. There are hieroglyphs on the walls of 
the Egyptian tombs that describe the manufacturing process of 
making beer. And so, when we started the brewery 31 years ago, 
I would have to say I felt fairly humbled being in an industry 
that had such rich history. But over the course of that period, 
I have become acutely aware that the beer we make is dominated 
by where we make it, and there are attributes of what we do 
that are influenced by our environment.
    One of them is that we live in a tough spot. We have to do 
things differently because other people in other areas have 
industry norms. Oh, it's always done this way. Well, what we've 
discovered is that our attitude is a little bit different 
because we have to do things differently because it's not 
always done this way. Now, I'll give you a couple of examples. 
When we started I don't think we really thought of ourselves as 
being grossly innovative but the place creates the person.
    One of the things that we do now, we call it Beer-Powered 
Beer. We take a waste stream which is our spent grain. When you 
make beer, you take grain, you steep it in hot water, and you 
extract a lot of the good things that become the end product. 
But the residual, the waste-spent grain, is something that 
others can easily deal with in areas where they're close to 
agricultural users, cattle feed and the like. But there are 
other facilities that have to dispose of the grain in landfills 
because they're not close to the agricultural communities.
    For us, we knew that we didn't have much agriculture in 
Juneau, so we very quickly realized we had to do things 
differently. So we started drying our spent grain. We used a 
portion of it for fuel, but grain is a very difficult thing to 
burn. What we ended up doing is developing a process, which we 
just received a patent for, in regards to using spent grain as 
a sole fuel source for steam generation.
    Heineken Brewing Company tried to do this in Namibia, 
Africa, because they had a similar situation there. There 
wasn't an agricultural user for their spent grain. It ends up 
that they had to abandon the project and what they do is now 
use a combination of traditional fuels with the spent grain.
    Newcastle, in Manchester, England, also did the same thing. 
They were in a municipal environment that they had to dispose 
of the spent grain. It was very difficult. They spent $25 
million trying to develop a process using spent grain as fuel. 
They abandoned the project.
    We're the only brewery in the world that is using this 
waste stream as a fuel source for a steam boiler as the primary 
fuel. We're targeting about 60 percent of our fossil fuel 
replacement with spent grain.
    The Columbian exchange price from spent grain is about $180 
a ton, last I saw. At $2 a gallon of diesel, the value of that 
spent grain to us is $350 a ton. The value is, kind of, an 
indicator of what that means for breweries. The application of 
this technology actually is much more broad than just beer.
    Thirty-one years ago, I'm just making beer, but creatively 
I think we're going to be able to change the world. And I think 
the demonstrated examples that are being talked about here are 
just that same thing.
    The pioneers of yesteryear had challenges and they made it 
work whether it be the railroad here in Cordova, the history of 
this town or the White Pass Railroad, but it's giving me goose 
bumps when I think about what we can transcend here from our 
locale.
    Now obviously, Washington State has a number of innovators 
and their impact on the world is obvious. But I also think that 
what we have may be for this portion of population but a 
disproportionate geographic challenge. We think differently. 
This state thinks differently, and that application can be 
international in its impact.
    Carbon dioxide is another example that we innovated with. 
Carbon dioxide is a gas that we use to press our tanks. We use 
it for blanketing, protecting the beer for its integrity. The 
most common source of carbon dioxide is fossil fuels.
    Low and behold when we're fermenting beer, a whole bunch of 
carbon dioxide comes off in its fermentation. So, in 1998 we 
started capturing all our CO2. In 1998, we were able to recover 
800,000 pounds of CO2 from our fermentation. The fermentation 
gas is from photosynthesis. It's a renewable resource, whereas 
most all of the CO2 used by breweries is fossil-based. We 
replaced it.
    The steam generation that we're using right now for our 
plant, partially from our spent grain, also has to be down-
stepped in pressure. It's enough to get to the pressure 
reduction process--we're using a stream pro-gen plant--so that 
we're reducing the pressure by, at the same time, generating 
electricity.
    This is not in place, it's just in the engineering phase at 
this moment. We have a zero-power strip in our plant so that we 
basically have the same phase coming in as going out. And it 
just gives me goose bumps to be able to be talking about things 
that are a little bit behind the scenes because we're just 
making beer, you know, we're not saving lives. These people are 
saving lives. We're just making beer.
    [Laughter.]
    I really appreciate the opportunity to be here and be 
before this guest panel, but I also think that we have an 
opportunity as individuals and individual companies to make an 
effect that can be more broadly applied and the type of 
platforms that we create are due to necessity.
    So while there may be accolades, I have to say that 
necessity is the mother of invention. In that light, the 
opportunities that we are given here within the state, the 
opportunities that we see every day and enjoy are one of the 
reasons why we're here and we make it work.
    Thank you.
    [The prepared statement of Mr. Larson follows:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    

    
    The Chairman. Great story, really a great story. I think it 
is important to add that you are not just some small, local 
brewer. You have the biggest distribution in the state and are 
distributing around the country now. So, a remarkable level of 
ingenuity that has allowed for an expansion to your business 
that is really quite incredible. Thank you for sharing that.
    You know, it does make me wonder as I listened to the panel 
here and the conversation coming back to how Alaskans are 
pioneering in so many different ways and different spaces. I 
don't know whether it is because we have longer, darker winters 
and we just have more time to think.
    [Laughter.]
    I think about the sleep of folks out here and those that 
spent a lot of time in a wheelhouse just, kind of thinking, 
maybe we have time, more time here to just think about 
solutions to the daily problems that we have.
    But, let me get to questions, not just musing because you 
all have provoked such great thought here with all that you 
have brought forward. I challenge any one of you on the panel.
    Mayor, you spoke about AquaHarmonics and the great 
innovation there that the wave generator, and the recognition, 
that those local folks have achieved.
    And the discussion also that you have raised, Meera, and it 
was great to be with you at that panel a couple weeks ago about 
micro-nuclear reactors and advanced storage issues.
    Just, kind of, projecting out, where do you all see this 
next generation of technologies going, that you think are 
particularly promising, either in the near-term or the medium-
term, for solving some of the challenges that we are currently 
faced with when it comes to microgrid and hybrid energy 
solutions? And when you think about our coastline, when you 
think about the marine hydrokinetic potential that we have 
there, what are you looking at now as that next great 
opportunity? Again, keeping in mind that it might not take over 
the world, but it could transform a community here, what are 
you working on that's exciting that you can share?
    Clay?
    Mr. Koplin. I'll answer in two little pieces and I'll jump, 
kind of, right to the end game of smart grids.
    So I envision a future where someone has a washer or dryer 
set, for instance. The washer can hold a full year's supply of 
soap and fabric softener and everything. Once I throw the 
clothes in I don't care when it runs, as long as it's not in 
the next 24 hours.
    As I open my freezer and close it and take salmon in and 
out of it and everything, it can learn my habits with very 
inexpensive robot sensor technology. It's evolved so rapidly. 
It can learn my habits. And if it's talking to our electric 
system and knows when renewable energy is available, it can 
decide when it wants/needs to cycle.
    And if it's talking to the system that's, you know, if our 
grid is also talking to all the other freezers in the system, 
it can say, let's run these freezers, and then these, and then 
these, in progression instead of all at once and actually 
smartly manage people's appliances and uses in a fully 
integrated way that can almost, kind of, create demand from the 
user side. So that's a lot of where the technology can go 
similar to electric vehicles.
    Right now, we're working with Schweitzer again, and the 
U.S. Air Force has a grid-to-vehicle program that they're just, 
kind of, reaching the end of. And as I think you mentioned, 
Senator Cantwell, the Department of Defense also has frontier 
installations and what not.
    But we have the Coast Guard here and as you know they're 
considering two fast class cutters in Cordova, but imagine an 
environment where they can not only provide their services here 
but also engage with the Department of Defense, through the 
Department of Defense in some of these new technologies where 
these excess electric vehicles from the Air Force, with their 
smart grid technology, our smart system can charge those one 
day when we have some excess power, and then discharge them 
back onto our grid.
    I see a future smart grid where we can use automation and 
sensor technology and this world class technology that 
Schweitzer Engineering labs, one of our partners in Washington, 
is really involved with.
    A second little piece would be, oh, I lost my train of 
thought. I was thinking about AquaHarmonics. But oh, one little 
piece, about 15 years ago I wrote a little white paper with 
Institute of the North on cryodams. We have such tremendous 
amounts of steel and concrete required to build our 
hydroelectric plants, yet we have glaciers that naturally dam 
some of our rivers and develop huge repositories of water. So 
why not do that intentionally? Why not use our local glacial 
silt and wood pulp?
    One hundred years ago, during World War I, the British--or 
World War II--the British built a frozen aircraft carrier in 
Canada. It took it three years to thaw out when it was done.
    So, particularly in Greenland, where they have some excess 
hydro in places, they can use that over transmission lines to 
freeze materials and use that as our dams of the future, maybe.
    And now that we have advanced micro technology of carbon 
fibers to reinforce them, sensor technology could literally 
blend in with the frozen material that can communicate the 
stressors and strengths. We have a next layer of technology now 
that can maybe make something like that possible.
    We just find that we need to find a way to test it and 
through FERC on federal land would be tough, but that's why 
partners like Greenland, again, they have the necessity. They 
have ice, rock and water and very little else. I mean, the 
extra technology we can share with them.
    The Chairman. One of the things that we saw yesterday that 
was very interesting at McKinstry was basically just computer 
panels. What we were looking at was all of the schools within a 
particular school district and they could tell where you were 
losing energy, where there was inefficiency.
    You send a note off and somebody does something and the 
next thing you know everything is handled. But, you know, when 
you think about our schools and the amount of money that we 
spend just to keep our schools heated and warm, so much so that 
it comes out of the academic side of the budget equation. We've 
got Senator Stevens here with us and he knows the impact to our 
schools when our energy costs are high, which is from the smart 
technologies that are out there. So, we could be doing so much 
more.
    Others? I'm over my time, but go ahead, Meera or Gwen or 
Dr. Ellis? Go ahead.
    Ms. Kohler. Well, you know, we have demonstrated very high 
penetration renewables in our communities, but we can go a lot 
higher. We now have 15 communities served with wind with eleven 
wind farms.
    We've got two more large turbines going in and one of them 
is going to be a pretty unique installation because it's a 900-
kilowatt machine in the community of St. Mary's which is a very 
small community.
    We do have the ability and I'm going to be connecting them 
with another village which is still going to be at about 150 
percent of peak capacity with that wind turbine. And so, what 
we're working on with the grid bridge concept, I think, is 
going to get us a long way.
    But one of the technologies that, I think, is not being 
paid enough attention to is the potential to use hydrogen from, 
you know, water. Everybody has got water. Every village has 
water.
    Can we come up with a relatively low-cost, hydrolysis 
program to create hydrogen to super charge the diesel fuel that 
we are using? I mean, it's all about efficiencies. That's the 
reason we have wind is to get the most kilowatt-hours per 
gallon of diesel fuel.
    If we can use the surplus wind to create hydrogen to get 
even more efficiency out of that diesel that, I think, is a 
relatively seamless technology. Right now, it's not commercial, 
but maybe that's something that we could focus on as to how we 
can put some of that excess renewable energy to good use.
    And also, the issue of connection. Alaska, as I said, is an 
energy-starved state and what Gwen and I had and a few others 
have partnered on, Rob also, is the concept of HVDC, a large 
HVDC grid across the State of Alaska which would allow us to 
put very large amounts of renewables in with very inexpensive 
natural gas from the North Slope and displace millions of 
millions of gallons of diesel across the state to feed our 
energy-starved industry.
    As I said, Alaska sells six billion kilowatt-hours a year 
which is half, less than half, of what Sacramento sells. That's 
just a crying shame.
    Our industry is starved. We can't attract good industry, 
like Cira Farms, the high-tech technologies up to Alaska 
because we don't have affordable energy. There is no substitute 
for affordable energy.
    So I think that there are opportunities for partnership and 
evolution that are second to none.
    Ms. Holdmann. I'll just, kind of, follow up on what Meera 
is saying.
    I think right now, what Meera and other utility managers 
are doing in Alaska is really pretty incredible. I just want to 
highlight that one more time.
    You said 40 percent displacement of diesel fuel in some of 
your communities but at an instantaneous penetration level 
she's getting to 100 percent on a relatively regular basis. I 
don't know how many utility managers in other parts of the 
country would feel comfortable with 100 percent penetration of 
wind energy on their grid. That's just not something that's 
done anywhere else, I don't think, in the United States on a 
regular basis. And so, right now, I think what we're really 
focused on is improving process efficiencies in the short-term.
    How can we do better along the lines of what we're already 
doing? That could be, like for Clay, looking at how do you 
factor in frequency regulation using your hydro so that you can 
maximize your hydro potential and use other ways of actually 
getting that frequency regulation where right now you're losing 
10 or 20 percent of your potential production because of that? 
Or for Meera with this grid bridge system, this is going to 
give her the chance to eke out a little bit more efficiency.
    A lot of the utilities in Alaska are using this demand 
response, basically having thermal loads and other loads in 
specific locations like, for example, in Kotzebue they have an 
electric boiler in the hospital there that is turned on and off 
based on how much wind energy is being produced at any one 
time. And the utility controls that.
    And so, that's a way that we're really able to manage the 
energy production as a whole, not just looking at electric 
power, but also these heating loads. And there's days where 
they don't need to run their other, their alternative diesel-
fired boiler at all. They're just running on electric power.
    So, looking at distributed controls, we are working with 
ABB on that. They've been a big player up here in Alaska. I 
know you heard from Siemens the other day in their testimony to 
you.
    You know, getting these companies up here to partner with 
Alaskans is really important, and you can help advocate for 
that because we can work with them to harden their 
technologies. I think that's something in the short-term that 
we're thinking is important.
    Electric vehicles is a piece of that and then also this 
built environment question, you know, we've been doing a lot. 
The Cold Climate Housing Research Center is not represented 
here today but they have a Northern Shelters program, really 
making sure that our building systems are appropriate for the 
environment is important.
    Long-term, I agree with you, Meera. Transmission, trying to 
figure out ways to reduce the cost of transmission using like 
multi-nodal HPVC is something we're quite interested in up here 
because that would be the strategy for building out a grid in 
larger parts of the state.
    Energy storage continues to be the Holy Grail. I don't 
think that we have the optimal solution for that yet. So, 
that's something that I'd like to see the Federal Government 
continue to invest in.
    Hydrokinetics, ocean, wave, river energy. That's something 
that's really important up here in Alaska because if we can 
find effective and cost-effective ways to take advantage of our 
water resources, it would be very beneficial. Almost every 
community in Alaska is based on some sort of body of water.
    And then nuclear, you mentioned the small, mini nuclear 
solutions and the small nuclear battery that you can bring in 
to these remote places. I really think that is something that 
we need to be looking at. I'm not always a proponent of Alaska 
needing to be a first adapter of these kinds of technologies, 
but long-term if we had really safe, reliable, small, mini-
nuclear reactors, that would be an excellent solution for many 
remote places in the state too.
    The Chairman. Senator Cantwell.
    I know we will have an opportunity to continue this kind of 
open dialogue.
    Senator Cantwell. Well, thank you, Madam Chair.
    This is really fascinating. I have so many things that I 
want to ask, so I will try to come up with a couple of broad 
things for all of you.
    I think for Gwen and Dr. Ellis, on the topic of technology 
demonstration. The Pacific Northwest Lab did a demonstration 
out on the Olympic Peninsula on dryer usage and other 
appliances and showed that you would get double-digit savings.
    But it strikes me that our national lab is going out to one 
geographic region of our state trying to prove a theory. But to 
your point, Gwen, why wouldn't microgrids just be a go-to 
technology for people every day of the week? If you were either 
the national interest or a private interest, the microgrid is 
the best beta test you could possibly ever have. I mean, you 
could probably get it done in a week and you could find out 
what is happening.
    I know we have in our bill a provision to promote some 
demonstration projects on microgrids, but should we be even 
more aggressive given how much information that we could learn 
by doing these small-scale deployments? We would just be 
getting so much information back so quickly.
    Ms. Holdmann. Senator Cantwell, I would just like to make 
the point that I really appreciate you recognizing that we have 
this unique opportunity to be testing and demonstrating things 
in Alaska. We actually don't like to think of it as being 
demonstration and pilot projects. We're a little bit, we're 
beyond that.
    Senator Cantwell. Right.
    Ms. Holdmann. We just want to make the step work, not just 
over some short period of time where there's some funding, but 
we are looking down through for the long haul and making these 
things work and our utility managers are really very, very 
willing to be a strong partner in that.
    I think one thing that both of you are, I believe, aware of 
is that at the federal level our Alaskan grids don't count as 
microgrids, according to the federal definition by Department 
of Energy. And that's hindered us really significantly in terms 
of being part of these longer-term testing kinds of scenarios.
    A microgrid at the federal level for the Department of 
Energy is a small grid that can island and isolate itself, but 
it needs to be able to connect to a larger grid or else it's 
considered separate, you know, an islanded grid. And so, 
there's money put aside for looking at specific situations 
around islanded grids. But I really think that we need to be 
thinking of this as just a microgrid and the fact that we're 
not connecting to a larger grid is really irrelevant because 
the difficult part is about the islanding part.
    And so, when the Department of Energy, you know, calls us 
out as not counting, I think it really hinders our ability to 
be part of that national solution.
    Senator Cantwell. Dr. Ellis, should we be doing more 
demonstrations on microgrids?
    Dr. Ellis. In my opinion, absolutely. There are many, as I 
said in my opening remarks, interesting technical questions 
that haven't been answered in detail.
    Just to give you a couple of examples. Some of the 
microgrid demonstrations that we do work hand-in-hand with 
stakeholders and those have to do with high security 
applications, for example, where we don't, not only want 
reliable electricity from the point of view of electrons, you 
know, being delivered to the load, we also want to make sure 
that those energy systems are cyber-secure.
    And so, sometimes we don't think about these things, but 
for some applications it's absolutely paramount. So we're 
trying to push the limits on what it means to have secure 
energy supply that is able to withstand physical and cyber 
threats in different applications. So, with definitely some 
more of that.
    I also want to point out that, you know, this issue of 
trying to get to 100 percent renewables in practice is very 
hard. What has been talked about today in some communities--
kind of, get there by putting in 10, 15, you know, 20, 25 
percent. By the time you get to the kind of penetration levels 
that we were talking about in some places here in Alaska, 
things become rather difficult. It's not a lot of fun to think 
that you're relying 100 percent on inverters and batteries and 
things that, you know, you hope nothing bad happens.
    So we're looking at cases within these microgrids that 
might be a little bit extreme so that we can in the future 
guarantee that these systems really are robust. For example, 
when you're running on 100 percent solar or wind some of the 
things that the engineers worry about is what happens when 
there is a fault on a line. With a typical power system that 
has rotating machines, like a micro hydroelectric, the system 
is able to ride through that fairly well. But the dynamics, 
when you look at that in detail, are very different when you 
have 100 percent penetration of renewables.
    So it is really those cases that we are trying to iron out 
from a National Laboratory perspective to make sure that new 
systems are bullet proof, so to say, at 100 percent 
penetration. And some states are going in that direction. 
You've seen, for example, the story of Hawaii, that's where 
they're going. There are other countries, including places like 
Ireland, that have similar goals. They are at a high 
penetration level, but as they go there they find somebody's 
technical problems that are challenging down in the details. 
So, we think, we believe that more demonstrations that showcase 
how to solve those problems, those age problems, are extremely 
valuable for the industry.
    Senator Cantwell. I think that is so important and should 
not be lost about the advent of microgrids that they offer so 
much from a test bed perspective, but having been involved in 
the early days of internet media software, I can just tell you 
that you sit around and talk about, ``how is this going to play 
out'' and ``how is that going to play out'', and then all of a 
sudden you can just make it live and instantaneously get 
feedback from it, from thousands of people was a great asset, 
something that we were not able to do before.
    So, to me, the microgrid, whether you are talking about 
security or you are talking about the technical problems of 
integration of renewables, we should be making sure there are 
adequate resources there to allow the microgrids to give us 
more information. I'm saying just broadly--technology takes up 
so much time.
    Dr. Ellis. It does.
    Senator Cantwell. And you can get us instantaneous feedback 
and some real-time information.
    I also think, as we start this era, which I guarantee you 
is going to end up being one of the most tumultuous eras of 
what a utility is today, okay? There is going to be a 
transformation of how energy is generated and put on the grid 
and delivered back to the home.
    I mean, I am pretty sure in 20 years, 25 years, we are all 
going to be in the energy business. That is, our home is going 
to be in the energy business, and it is going to be generating 
something and it is going to be putting it back onto the grid.
    Right now in Washington, we have very high electric vehicle 
deployment. That is because of our cheap electricity rate and 
the interest of the public. So we will end up trying to think 
of electric vehicles as battery storage in our communities and 
whether it is smart to charge our car at night and then the 
next day, charge it back onto the grid at the cheapest kilowatt 
rate.
    Those kinds of things are going to transform, in the next 
couple decades, how utilities are perceived and how they work, 
and you are the tip of the spear of that in reality. You are 
the tip of the spear because you are doing that right now. The 
microgrids are doing that right now.
    Microgrids are helping us think about these relationships 
between what is a utility and what is the consumer and what are 
they developing and what are they putting onto the grid and how 
are you going to get it. So Alaska could play a very valuable 
role for our country that way.
    So I appreciate that.
    And Mr. Larson, I don't know that you are claiming the 
title renewable beer, but you are getting pretty close.
    [Laughter.]
    Mr. Larson. Well, I actually have some oblique comments in 
regards to that. You know, Juneau's an amazing community. 
Alaska is an amazing state. In 1916, February 14th, the first 
lake tap in North America was put online and that was a high 
alpine lake, tapping the anaerobic area of the lake where 
basically no adverse effects were being implemented in the 
environment, basically because of necessity those pioneers that 
wanted power for the mines. Well, that lake tap and its creek 
is still supplying, I think, about 10 percent of Juneau's 
power, 101 years later. Juneau is 99.9 percent hydro; however, 
hydro is blanketed as a non-renewable resource because of the 
impacts having to do with dams and the like in other areas.
    This truly is a green power source, and I think we should 
start thinking about other types of issues. That's something 
that really needs to be addressed. I think the fact that we are 
100 percent green electricity, the renewable resource needs to 
be recognized, but it's not on a federal level.
    Senator Cantwell. Well, I can tell you that BMW builds the 
car or parts of a car in our state, the i3, because they market 
that car as a totally renewable car. Every aspect of that car 
can be renewed in that the electricity that it uses comes from 
hydro, so they call it a renewable car.
    We are going to see more of this as consumer interest 
shifts that way, but you are saying that you had a 60 percent 
fuel----
    Mr. Larson. Reduction on----
    Senator Cantwell. Reduction.
    Mr. Larson. For steam generation.
    So what we end up doing, we use electricity for much of our 
refrigeration, but we also, in the process of making beer, 
you're boiling the precursor to essentially remove all the good 
stuff from the hops that we get from Yakima.
    [Laughter.]
    But in that we need fossil fuel, so that's where we're 
replacing 60 percent of our fossil fuel use.
    But the interesting thing that Mayor Koplin brought up is 
one of our electrical uses is the refrigeration. Now our 
refrigeration needs aren't on a demand issue. We can delay 
certain types of refrigeration initiations based upon the peak 
loads of the utilities. I think that's the other point I was 
going to maybe mention.
    And again, these are very sophisticated, regulatorily 
controlled processes, but there are ways for industry to 
partner with the local utility. But because of bureaucratic 
time and effort----
    [Laughter.]
    There's just no way. I mean, it's understandably for good 
reasons, but I look at our utility's hydro. I mean, they have 
interruptible power sources. And historically, the way they 
used to do it is they would partner with industry and allow 
industry to bear the burden of the exposure in risk and cost 
because they were on diesel.
    For example, our Kensington mine, which is a very large 
mine outside of Juneau, is on interruptible power. So, during 
those periods of time when the hydro reservoir is deemed 
depleted to the point where maybe they will have to sit there 
and go to a diesel backup, they have certain interruptible 
users. Green Street mine is one of them. So they will go 
offline. They have to go on diesel.
    Now, that's an on/off situation. And you know, quite 
frankly, a very large user, it makes sense to go through the 
bureaucratic labyrinth to be able to get that done and have it 
approved by the regulatory agencies.
    But in a situation like ours, where there's a peak load and 
in our community on specific diurnal cycles that are well known 
by the utility, we could have our refrigeration delayed by two 
hours, three hours. There isn't that flexibility within that 
regulatory compliance for us to be able to partner.
    So when you're talking about the dryers, guess what? We 
have a one megawatt service and that peak issue that they face, 
they fear our spikes.
    Right now, we're controlling our refrigeration. We're 
basically able to sit there and start to reduce our peak 
demands because of the fact that we have higher sophistication 
in monitoring our systems. But we're doing it independently. If 
we partnered with our utility and could do that economically, 
we could reduce significantly our impacts on the utility. You 
gang that up, and we're basically doing exactly what's being 
proposed here.
    Senator Cantwell. So flexibility, a little flexibility, as 
well.
    Mr. Larson. Yeah.
    Senator Cantwell. We will look at that.
    Then do I understand, you have patented some of this 
technology and it is being deployed across the industry sector 
now?
    Mr. Larson. Yeah. And the thing is that, it sounds like, 
no, no, there's no question. It's situational. Certain 
breweries are within maybe a very large metropolis and they 
cannot take their spent grain out to the agricultural users. 
They have a problem.
    There are breweries that are landfilling their spent grain. 
Even though that was an option for us, theoretically it wasn't 
an option for us, you know, ethically.
    I'll tell you what, you know they talk about the cutting 
edge of technology? I call it the bleeding, fleeting edge of 
technology because it's extraordinarily painful. It's 
extraordinarily expensive, but where there's a will, there's a 
way.
    And you know, you just put down and we sit there and 
sometimes look at life cycle cost again. I remember the first 
five years of operations if that piece of equipment didn't pay 
for itself in one year, we weren't going to do it.
    And so, then things changed. Now you can get loans for five 
to seven years, commercial loans. So if it pays for itself in 
five to seven years, okay, that's a viable approach.
    Well, some of this is that the payback circle is much, 
much, much longer. But situationally, it could be a non-starter 
for a brewery in some remote location or some downtown 
municipality, like in Manchester, England.
    But it's not just marine technology. There's a lot of types 
of materials that are very difficult to burn. Micea, from a 
pharmaceutical industry. It's a biohazard and they have a very 
difficult time. It has a very strong problem in its combustion. 
They tried to incinerate it and they have to use a lot of 
fossil fuels to do it. Well, our technology is applicable to 
it. And that's just one of dozens of different types of things.
    But I go back to, you know, I'm inspired by the history of 
our pioneers and I look back at, again, in 1916. What in the 
world were they thinking? They sat there and tunneled under 
this high alpine lake and tapped it, and then Spanish Champion 
in the '60s and then Lake Dorothy. Juneau is hydro.
    They've also taken that innovation and applied it to 
interruptible power users. They do that on a community basis 
for those people who have electrical heat in their homes. They 
have programs where they can interrupt their heat use.
    I just think it would be great to have even more barley 
base so that we can all work together as a community to reduce 
our needs. This is one way of reducing our needs, and it is a 
cheap, cheap, cheap way.
    Senator Cantwell. Yes, it is. Thank you.
    Madam Chair, I have more questions.
    The Chairman. Oh, I know. We have tons of questions, and I 
am sure that everyone sitting here would love to jump in.
    You mentioned a little bit, Geoff, on the investment side. 
We talk a lot back in Washington, DC, about this ``Valley of 
Death,'' where you have the innovation that is going on in our 
national labs, in our universities, in entities like ACEP here 
and then you have the problem of getting to commercialization 
and actually seeing that translate into viable activity and 
action.
    I know that there are probably a few people here in the 
audience that are actually interested in the investment end of 
things.
    As a state, right now, our Alaska Renewable Energy Fund, as 
I believe, has no money in it. We have had opportunities for 
the state and various programs to help facilitate some of the 
investment.
    At the federal level there are, obviously, grant 
opportunities to help build things out, but so much of what we 
see that is lost between the good idea and getting into play so 
that there is benefit shared, is kind of in this valley where 
it is just not enough to allow for the public-private 
partnership to move forward so that you have this level of 
investment.
    I appreciate what you said, Meera, that while they need a 
level of testing, and Alaska can be this great incubator for 
good ideas, we cannot be a test bed just for the purpose of 
being a test bed because we need to have these applications 
street ready, because if they are not you have communities that 
are in the dark and in the cold.
    So how do we do a better job, again, with the partnerships 
that must take place at a time when the state is facing 
financial issues? From the federal perspective, we have some 
real serious budget constraints that will be upon us as we are 
moving forward in this next budget for 2018. How can we be most 
helpful at the federal level, then, to help move good ideas 
from the incubator to commercialization in a manner that is 
going to be helpful?
    Geoff, you speak about the history over 30 years of what 
you were able to do, you have to have your investors that 
believe in where we are with this. How are we making it happen 
in Alaska? What can we be doing better at the federal level to 
help facilitate that and whether it is specific programs that 
we should be looking at, give us that information, but help me 
out here in terms of how we make sure that the good ideas that 
we talk about now do not get lost in this so-called ``Valley of 
Death?''
    Ms. Kohler. And I'll just touch on it real quickly.
    All too often we have federal agencies, like DOE and 
others, that basically helicopter in and they tell us what 
wonderful things they're going to do for us and how they're 
going to transform our world and then they leave----
    The Chairman. They need to be listening to you.
    [Laughter.]
    Ms. Kohler. They do. We need to be involved. They need to 
involve us in coming up with solutions. I think that Sandia's 
presence here is wonderful. We need the national labs to be 
major players. I think ONR has just been a fabulously receptive 
resource.
    But we do also have, for example, the NAI Commission and 
the High Energy Cost Rent Program and others like that, that 
have fostered innovation and both need to be continued.
    The Chairman. Great.
    Ms. Holdmann. I'll kind of jump in from where Meera started 
there.
    I think one of the things that I believe that we can look 
at is how we're using existing federal resources and, kind of, 
use them a little bit more wisely. Like Meera was saying that a 
lot of times we have folks from the Federal Government, from 
labs that are, kind of, helicoptering in, I'll use her words. 
and providing technical assistance for our communities.
    But it's like what Clay was mentioning with NREL when he 
pointed out that here the Eyak Tribe could demonstrate best 
practices in some ways. I think enabling Alaskans to really be 
providing that technical assistance for our communities that 
are struggling a little bit more makes a lot of sense rather 
than having federal resources providing that technical 
assistance.
    And then where we really need technical assistance is to 
the, kind of, higher functioning people that are looking at 
those next generation kind of things. I would love to have 
folks from Sandia come and embed with ACEP and work with us and 
our utilities on specific solutions.
    That would be such a wonderful use of federal resources 
that we can learn from one another, that we're really 
benefiting from working together on these solutions rather than 
having labs that are just going into communities and providing 
technical assistance in ways where they don't understand the 
complexities of what is happening in Alaska. It winds up being 
that people, like me and Meera and Clay, wind up playing 
interference a lot of times with some of the things that are 
then proposed or suggested.
    I think also, earlier involvement is important. And since 
we're talking specifically about innovation here, what I have 
really found, I've been really involved in this and thought 
about it a lot, been involved in it at numerous levels. And we 
need practitioners involved at an earlier level in the 
technology development process. I think that's really 
important.
    If you have folks like Meera that understand how things 
work at the end of the day, working more closely with the 
companies that are at an early stage of technology development, 
you're going to have a much better outcome in the end.
    We have this laboratory and we test the things at the 
utility for people. We have a full power fault simulator so we 
can simulate. We can actually not just simulate, we can do a 
full test at full power levels to make sure that we can see how 
the equipment responds.
    But why those guys that come in to see these new 
technologies, they never thought about how to actually 
integrate their technology into the system. They have not put 
any thought into that. They just figured that's going to happen 
at the end of the day, no problem.
    But actually, if they thought about it at an earlier point, 
it would have saved a lot of hiccups along the way. So getting 
us Alaskans more involved early on in this technology 
development team, because it's not just one ``Valley of 
Death,'' it's multiple ``Valleys of Death'' that, I think, 
happen. We've got to get practitioners involved at an earlier 
level to make better decisions as that's going along and have 
immediate partners that you can have engaged, as you're, kind 
of, trying to mature the technology.
    The Chairman. Great.
    Ms. Kohler. And you know, real quickly.
    One of the challenges that we run into is federal officials 
from various different departments coming in and trying to 
direct interaction with communities where you basically wind up 
being competition with the utility that's struggling to provide 
the type of affordable service that they demand. And then you 
wind up with cost increases a lot. So that needs to be taken a 
look at. Sorry.
    The Chairman. Great, no, I appreciate that.
    Dr. Ellis?
    Dr. Ellis. I just wanted to briefly, I agree, first of all 
with the group so far on this area.
    Coming from a National Laboratory, you know, my perspective 
is that we could do better in terms of information sharing 
among the National Laboratories, among the institutions that 
work in this area. I think that promoting an easier way to 
share information through some sort of a consortium in this 
area would be really, really good.
    There's also something that we could do, I believe, a 
little bit better from the standpoint of National Laboratories 
to make it easier to partner with the private sector with 
companies that are developing, as you call it, technologies 
that are in the early stage.
    We are there to serve the country, the nation, but the way 
that the National Laboratories work sometimes make it a little 
bit difficult, I think, for, particularly, smaller companies to 
partner with us.
    So we could use a little bit of help, you know, maybe 
reviewing those processes or what are the available options for 
the national laboratories to really support the kind of 
partnership like, for example, the MHK of folks that developed 
some of the imaginative technologies here.
    I'd also like to say that we need to think of some of these 
challenges in the long-term. I don't like this idea of 
parachuting into communities and saying you're going to save 
somebody or whatever and then disappear.
    Some of these things actually take time, take a concerted 
effort over time. And I think that thinking about programs that 
are long-term, stable and that have goals that need to be 
pursued hand-in-hand with the local stakeholders is something 
that we could potentially do better, to define those kinds of 
longer-term efforts.
    And we do that, I think, very well for science and 
technology development, things like oh, I don't know, codings 
and you know, biofuels and things like that, but when it comes 
to systems integration, it just seems like a page of that 
partnership is such that they're volatile, you know, a one year 
project and then it's gone. And so, I would love to see more of 
this, sort of, longer-term projects that have us working hand-
in-hand.
    The Chairman. Integration is the key.
    Geoff? Clay?
    Mr. Koplin. Go ahead, Geoff.
    Mr. Larson. Okay.
    Innovation gets back to the bleeding edge of technology. 
Innovation is very painful, and small purveyors have different 
ideas and then can implement them.
    I think if there's a way that some of the risk on a 
financial basis that could be defrayed would be great. I'll 
give an example that we have. We put in a mash filter press 
which is, kind of, a unique technology. No craft brewery in the 
U.S. uses it. And what it is, it's a press that actually uses 
much less water in the manufacturing of that precursor of beer 
wort. But the press itself ends up yielding a very dry cake at 
the end of it. We end up using six percent less malt to get the 
same amount of beer. And well, the first year we reduced our 
water usage by two million gallons of water. We're one of the 
lowest water users per gallon of beer in the United States. In 
fact, we were cited for best practices for a brewery that uses 
a resource to reduce your water usage.
    But how does this affect energy? Well, our lack of 
discharge of that five percent of the sugars because of the way 
we processed, does not go down the drain. That less water does 
not go to our utility. The power savings, not only internally 
because we use less water, we have to heat less water up. The 
power savings of our utility was strategically motivating for 
us to put this piece of equipment in. We are the first one in 
the United States to put one in for the craft sector. Now there 
are over two dozen small breweries that are using the same 
technology. Sometimes you have to risk it. Well, we risked it 
for a lot of reasons.
    We're in a small community. Our impacts on our utilities 
are strategically important. Without the water, we ain't making 
beer and without the wastewater treatment, we're not making 
beer. So it's a collaborative effort in reality and ethically.
    If there's a way to be able to identify that sort of risk 
in technology, it can be magnified in its result. We proved to 
others we can make international award winning beers. They 
didn't fear putting in a mash filter press. And now----
    The Chairman. Clay?
    Mr. Koplin. You know, Lewis and Clark, before they headed 
West, were classically trained for almost 10 years in 
everything biology. They were renaissance men, you know, by 
choice. They needed to know how all the tools worked.
    They were doctors, had the best medical technology, 
literally. They became experts at just about everything they 
could. But they took Indian guides with them starting from the 
East Coast all the way back, and that's how they crossed the 
``Valley of Death'' and the rivers and the mountains and the 
terrain and the poisons and the unknowns.
    That's how they got to their destination. It saved their 
lives several times having a cultural guide who understood the 
cultures, even though they weren't maybe directly related to 
the Indian cultures they crossed all the way West into 
Washington.
    It's amazing to me that some of the most amazing innovators 
and technologists are right here in our state, four, five, six 
hundred years ago and back for thousands of years, lived on the 
Arctic Slope. I mean, think of the resource limitations there 
to have a sustainable society.
    Anyways, we need to get back to the future and figure out 
whether we can't capture some of those processes and what not. 
I mean, I know you wanted to have a native represented on the 
panel today and that got a little tangled up, but they are some 
of our strongest partners.
    But we can be those tour guides for the national labs. 
They've got that robust technology and all of the best state-
of-the-art equipment, but we can bridge that cultural gap and 
the real need on the ground and I hope things happen.
    We're just so used to trying. I laugh at Meera's hydrogen 
example because I literally took a mason jar filled with water 
and baking soda and ran an electric loop off the ignition of 
the car and made a hydrogen generator that we were plumbing 
into the air intake on our vehicles because we wanted to try it 
on our trucks first.
    We were at it for several months and looked at our mileage 
and everything. We had a 15 percent gain, until we realized the 
oxygen sensor was automatically compensating and burning more 
fuel to try to make up for it.
    [Laughter.]
    We thought why are we getting 15 percent gain and it turns 
out we were just driving more carefully in accelerating.
    But that's how innovation happens, right? We learned a way 
to save 15 percent but the hydrogen thing, that's even better.
    [Laughter.]
    So, and that's what we really want to do, and our investors 
are our members. It's the Grey's and the fishermen that pay us 
huge electric bills.
    We have to give a return on investment, and that happens by 
better utilizing the resources we already have, getting more 
out of our hydro projects. We spend more in hydroelectricity, 
probably, in some years than we use in diesel fuel. So that's 
why it's a survival class. It isn't just a laboratory concept.
    If we can get together early on in these processes and work 
with the labs, as Gwen was suggesting, the whole journey gets 
much more efficient and the destination ends up being a lot 
more productive.
    The Chairman. Well said. I would say that Alaskans have a 
Ph.D. in living.
    [Laughter.]
    And do not ever underestimate what it is that we are able 
to learn and then to share as we facilitate innovation.
    We are going to try to wrap this hearing by noon.
    Senator Cantwell, why don't you take the last 10 minutes 
for your series of questions here?
    Senator Cantwell. Okay.
    Well, thank you, Madam Chair, and I again so appreciate the 
panel.
    I wanted to ask Gwen about this cold climate research, kind 
of tying in a little bit of yesterday and a little bit of 
today.
    Where are we with buildings and building materials and the 
science and integration and using that to helping us with 
savings on the grid?
    Ms. Holdmann. Yes.
    Senator Cantwell. And what else do we need to do to help be 
supportive from a federal perspective in the research of the 
Alaska hub?
    Ms. Holdmann. Right.
    Yeah, I think, you know, each region and we all have many 
different kinds of climate in the United States in different 
regions, from pretty tropical, hot areas, to very, very cold 
areas in the Arctic.
    And so, I think the issue around really locally appropriate 
housing that is going to both take advantage of the kinds of 
energy needs, locally, whether that's cooling or heating, in 
addition to, sort of, the way that people use their home 
structures, like the way people in our communities they really 
use their homes for social purposes. It has an important 
social, sort of, aspect to it.
    So having small rooms and small spaces doesn't always work 
as appropriate for supporting the culture in our communities. 
Really coming up with strategies in this northern shelter 
program that the Cold Climate Housing Research Center has 
developed is important. It is a nonprofit. That is, a private 
nonprofit. We work with them really closely because we're more 
on the grid scale, community scale. They're doing the built 
environment.
    And so, making sure that we're looking at that really 
holistically and thinking across that entire spectrum, I think, 
is really important. And these are places where what they're 
doing is really critical. But, as the state has less resources, 
those are programs that are really in danger of really losing 
steam and how can we really try to find more federal 
partnerships to try to shore up some of these really 
significant areas of expertise that have been developed?
    Our Mayor in Fairbanks where the Cold Climate Housing 
Research Center and the Alaska Center for Energy and Power are 
housed, has a net zero home in a very cold climate that's 
completely off-grid. Not because he wants to be off-grid, but 
because there is no grid where his house is, where our Mayor's 
home is.
    Fairbanks prefers its hot bed for research and innovation, 
in a way, that is sort of partnering across the state, but we 
really need to keep in mind the housing component to it. I 
think it's really important to be thinking about things like 
insulation and weatherization.
    Senator Cantwell. Well, one of the reasons the legislation 
that Senator Murkowski and I have supported is the next step we 
think is it is really targeting smart buildings. Forty percent 
of our energy use is in buildings and these facilities, I 
equated, to the next phase of efficiency given the fuel 
efficiency in automobiles drove the last chapter over the last 
10 to 15 years. This next chapter is about getting that 
efficiency out of the building side to reduce that 40 percent.
    What else do we need to do to help since we are not really 
a federal partner right now on the hub? What else do we need to 
do to help look at those solutions that are being deployed 
here?
    Ms. Holdmann. I think a lot of things that have been, that 
you are already paying attention to, I think both of you are 
doing an excellent job and--on where we need to be going and 
really, kind of, putting together this framework or this 
roadmap.
    I think the important thing is to, kind of, pull Alaska 
into these solutions because these things like demand response, 
all the buzz words that we are talking about at the national 
level, a lot of these things are already being done. The 
utilities figured out how to sort this out with customers.
    We have such small utilities here. How many utilities, like 
140 in Alaska or some crazy number that Meera was quoting the 
other day. You know, they're very willing to push the envelope 
and come up with new strategies. So getting Alaska to be part 
of that is important. We are a microgrid in this state, this is 
what we're doing here and it's relevant to this national 
picture. We've done a lot.
    Senator Cantwell. Dr. Ellis, do you have a comment on that?
    Dr. Ellis. Just a quick comment here.
    We have been talking today about the issues surrounding 
energy. For us, at Sandia labs the Arctic also represents a 
whole lot of other challenges. There is a lot going on in terms 
of changing climate in the North here where it's affecting 
communities. It is a question of national security. And in 
other cases, energy is part of a much larger set of issues that 
we have to deal with here.
    I wanted to point that out because, you know, we have been, 
Sandia has been working in this area for a very long time in 
terms of climate modeling, doing measurements, tracking things 
like ice movements and things like that. And it is an important 
aspect of what we do. And I think really, in terms of what can 
be done from a federal standpoint to see some of this 
opportunities flourish, it is very critical.
    I would challenge, I think, all of us to find ways to 
connect some of these initiatives. I know that the Department 
of Defense, for example, has a high interest in the region as 
well. You know, I heard from Gwen and others that they are 
actually funding some of the work in energy you're doing here 
in the state.
    I think that, perhaps, there are more synergies that we can 
see or that have come to the surface that we need to explore.
    Let me take one second only to, I meant to earlier, make a 
comment about your question about whether or not in definition 
of microgrids really covers remote communities. So that's an 
issue that a DOE program manager has discussed before with his 
team of laboratories that are working in this space. You know, 
I think as a laboratory team we're all of the opinion that the 
definition isn't really meant to exclude remote communities. In 
fact, some of the projects that are being funded through these 
microgrid R&D programs are specifically targeting remote 
communities.
    For example, the Island of Skagul, near the Aleutians is 
one of seven major projects to try to understand what we can do 
from the standpoint of better controls, you know, better ways 
of managing microgrids that are isolated with a lot of 
renewable resources. That's one of those projects.
    We're also working on new design methodologies and tools 
for upgrading microgrids. Both, by the way, AC and DC 
microgrids. And those are also targeting results. Just wanted 
to make it clear.
    Can we do more? Absolutely. But, you know, we're all in 
that, sort of a constrained resource sort of a situation.
    I'm actually leaving here energized with the opportunities 
to, not just from a technical standpoint that are here in 
Alaska, but, you know, understanding that people here really 
want to, out of necessity and otherwise, make a difference. I 
think this is a great place to move things forward.
    Senator Cantwell. Thank you.
    I know we are out of time, Madam Chair, but I just wanted 
to respond to the Mayor.
    When Lewis and Clark got out to the mouth of the Columbia 
River, they got waylaid because of the treacherous nature of 
the mouth of the river. In fact, there is a plate there 
commemorating it called ``Dismal Nitch'' which kind of gives 
you an idea of how dismal it was.
    [Laughter.]
    They were without food and without a proper canoe to meet 
those headwaters, and the local tribe showed up to show them 
where to get food and how to build a more sturdy canoe.
    The reason I am telling this story is because in Clark's 
journal he writes that nowhere, anywhere in America did he ever 
see a tribe so influenced by women than he had when he came to 
the Pacific Northwest.
    [Laughter.]
    So I think, Senator Murkowski, it is in our DNA that----
    [Laughter.]
    That this region of the world likes to be represented in 
the collaborative fashion that women bring to the table.
    I thank everybody here for their participation in today's 
forum. We will take these ideas back and try to work in a 
collaborative fashion for the very applicable innovation that 
is here in Alaska.
    Thank you for your great contributions.
    The Chairman. Well, Senator Cantwell, I would like to thank 
you.
    I do have to say that as I listened to each of our 
witnesses this morning, I cannot help but just feel so proud as 
an Alaskan. I do think that we recognize that we have a great 
deal to offer, but it is not just talking about it on paper. We 
are living it. We are doing it. We are making it happen. And we 
are capturing the attention of the rest of the country and the 
rest of the world.
    And so, for those that have been dogged in their efforts 
for decades to build a business where you are just making beer, 
but what you are doing as you are making beer is you are 
allowing others to believe in some things that many had just 
said were not possible.
    I think we recognize that for Alaska's future going forward 
we have to continue the level of innovation. We have to develop 
a level of resilience and almost autonomy, if you will, within 
our own communities.
    But I think that it clearly brings about a level of 
challenge that stretches the mind and allows us to not only 
make good things happen within our communities, but then how we 
share that with the rest of the country, how we share it with 
the world.
    I firmly believe that so much of what we see happens here 
in the energy space can be replicated around the globe because 
we are allowing that innovation to be brought down to a smaller 
scale that there is room to move up and we are demonstrating it 
here on the ground with great minds and great people leading to 
great innovation.
    It is not very often that during a Committee hearing I 
actually present a gift but you are a guest in our community. I 
know the Mayor has a jar of salmon there that I will allow him 
to present. I wanted to make sure that you didn't leave town 
without a gift from Copper River Fleece.
    [Laughter.]
    When you come to Cordova you must leave adorned with some 
aspect of something from Copper River Fleece.
    So, from those of us here, we thank you for your 
contribution on energy, but thank you for being here to learn 
from some great Alaskans about our opportunities.
    Mayor, it is your town. I will allow you the final word, if 
you will.
    Mr. Koplin. Well, thank you, Senators, for your leadership 
and what you're doing for energy and energy policies in this 
country and holding these kinds of hearings and reaching out 
and helping us bridge that gap as communities, as a state, as a 
region, the Pacific Northwest and as a country and ultimately 
as the world. We do have a lot to share.
    Gwen and I were talking last night about deploying smart 
grid technologies and we both worked lately with some 
Australian communities that are way ahead of us and we're 
thinking we need to go there and work with them.
    That would be really tragic. We have those technical 
resources here. We would much rather be working with our own 
technical labs, but there's so many connections here.
    Avista, now the electric utility for Juneau, was my path to 
call my friend, Tim McCloud, that manages that utility and say, 
hey, they're looking at this great battery opportunity down in 
Avista or down in Pullman, Washington, that I'd like to look at 
and it's right there at Schweitzer Engineering labs that make 
the relays that help keep the lights on all the time.
    So there are all these little connections, and I think 
that's part of what we do, too, is we communicate well.
    So let's keep the conversation going.
    Thank you.
    The Chairman. Senator Cantwell, the last thing I am going 
to leave you with is a pull-out from the Alaska dispatch from 
last week. The article is, ``What Alaska can teach the world 
about renewable energy.''
    We are making it happen here every day.
    With that, ladies and gentlemen, I thank you for your 
contribution and for those who have stayed throughout the 
morning, we greatly appreciate it.
    The Committee stands adjourned.
    [Whereupon, at 12:06 p.m. the hearing was adjourned.]

                      APPENDIX MATERIAL SUBMITTED

                              ----------  
                              
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]