Microgrids in a Changing Arctic

Climate Change, Growth, and Energy Infrastructure in the Arctic

The Arctic, a region often associated with oil and natural gas, is experiencing the effects of climate change as its landscape is shifting as the region warms at about twice the rate as the rest of the planet. Such change brings challenges, but also unique opportunities, as Arctic communities, policymakers, and businesses turn their eyes to the High North. 

Warming temperatures are making the Arctic more accessible, inviting growth and development as entities from around the globe seek to capitalize on energy resources, shipping lanes, fish stocks, tourism, and more. Despite economic promise, the Arctic still lacks sound infrastructure to absorb such growth. Specifically regarding energy infrastructure, pipelines and transmission lines are susceptible to damage from permafrost thaw, compounding the Arctic’s already high electricity costs and burdensome fuel delivery operations. 

Implementing cost-effective solutions for power generation and resilience are critical steps in ensuring and expediting Arctic investment. Proper implementation of microgrid technology can do just that, which has been the norm in Alaska for years. 

Guidehouse Insights defines a microgrid as a distributed network that incorporates a variety of possible distributed energy resources that is optimized and aggregated into single system balancing loads and generation with or without energy storage and is capable of islanding whether connected or not connected to a traditional utility power grid. 

Lessons from Alaska

Even to those engaged in the world of energy, the remote nature of the circumpolar Arctic can make it easy to overlook the innovations underway to combat energy-related issues inherent to the low population, harsh climate, and expansive geography. However, the challenges of remoteness have made microgrids an intricate part of the solution, particularly in Alaska. 

Microgrids are vital components of powering Alaska. According to the Renewable Energy Atlas of Alaska, the state boasts more than 150 microgrids varying in size to help power local communities. As the US’s gateway to the Arctic, Alaska has roughly 16% of the country’s landmass but less than 3% of its population. Alaskans pay the second most for per kilowatt-hour for electricity compared to the rest of the US, only trailing its noncontiguous counterpart, Hawaii. The low population density and difficult terrain make powering the state more onerous and expensive compared to the lower 48. 

Alaska is not connected to any grid in the lower 48 or in Canada and is home to the Railbelt grid. However, even that is a conglomeration of connected microgrids. Regarding fuel type, Alaskan microgrids have largely depended on diesel generators, but investment in renewable technology has significantly increased over the last several years. Alaska has invested over $250 million to develop and integrate renewable energy projects to power microgrid systems. 

Going forward, microgrid technology has the potential to play a key role in powering Arctic development as microgrid demand is expected to increase over the next decade. According to Guidehouse Insights, the global microgrid market is expected to grow from roughly $6.3 billion today to $30.9 billion by the end of 2027. As Alaska is home to 12% of the world’s microgrids, such growth could be a prime opportunity for the state to export its microgrid expertise to not only its Arctic neighbors, but also to remote areas spanning the globe.