Beats | August 6, 2018

North to the Future: ‘Arctic tech’ entrepreneurs help Alaska adapt to climate change

Amy Cortese
ImpactAlpha Editor

Amy Cortese

Alaska’s supply chain was precarious even before melting permafrost and Arctic ice put the state on the front lines of climate change.

The state’s vast scale—bigger than Texas, California, and Montana combined—has long presented unique challenges in delivering food, energy and vital services to remote regions sometimes only accessible by seaplane or dog sled. All but 5% of Alaska’s food is imported, leaving it vulnerable to supply chain disruptions. Residents pay some of the highest energy prices in the nation.

Now, Alaska is warming twice as fast as the rest of the U.S. Dozens of coastal villages face relocation as the seas encroach on their land.

Such extreme conditions make Alaska a test bed for solutions to urgent challenges. Under the banner of “arctic tech,” a vibrant entrepreneurial ecosystem is generating solutions focused on the production and delivery of sustainable energy, food and water in extreme conditions. Think microgrids, drones and hydroponics.  

“We’re driving our companies to do steel-in-the-ground projects in Alaska,” says Isaac Vanderburg, managing director of Launch Alaska, a two-year old startup accelerator in Anchorage that has emphasized energy solutions as arguably the most urgent need.

Anywhere else, these ventures might be called social enterprises. The term does not surface much in Alaska, where a no-nonsense, problem-solving ethos prevails. Alaska—led by a former Republican who ran for governor as an independent—is proposing to generate half of its electricity from renewable sources by 2025.

“If we don’t solve the energy issue in rural Alaska, there will be no opportunity for economic development in those communities,” Vanderburg says. “That’s the base of the economic development pyramid.”

New urgency

A pair of conferences, hosted by Launch Alaska and the University of Alaska’s Small Business Development Center, drew 400 or so people to Anchorage, the heart of the state’s budding entrepreneurial ecosystem. (I was a paid speaker at one of the conferences). Increasing climate threats and a slump in oil prices that plunged Alaska’s economy into a recession it has yet to emerge from, “are forcing people to think differently, to be a little more scrappy, and have a little more urgency,” says Vanderburg.

Alaska’s arctic tech scene was on display at a demo day held at a microbrewery, while the sun shone brightly in the evening sky. Entrepreneurs in the four-month Launch Alaska program—which provides mentoring, technical assistance and networking along with a $75,000 equity investment—took the stage under a moose-antler chandelier to pitch their startups.

Some of the companies were recruited from outside of Alaska to spend a week a month in the state and work with local organizations and customers. BoxPower, for example, makes rugged solar microgrids packaged in 20-foot shipping containers that can be set up in a matter of hours. BoxPower is installing three of its units to offset diesel in the village of Buckland (population 416) in northwest Alaska, thanks to a contract with NANA Regional Corp., one of thirteen regional Native Corporations in Alaska.

Carter Wind Energy takes a similar DIY approach with its mid-sized wind turbines, which are self-erecting and designed for use in remote, extreme environment locations. The current cohort also includes Omega Grid, a blockchain-based energy marketplace provider, and Correlate, a maker of energy management software.

Alaska’s forbidding conditions make it a valuable proving grounds. “We don’t have a huge market or a ton of people here,” Vanderburg acknowledges. “The thing that we have to offer to the world is that if you can make it here, you can make it anywhere.”

Alaska’s homegrown entrepreneurs are reaching for broader markets as well, including Anchorage-based VH Hydroponics, which makes versatile containerized growing systems designed to work in conditions from -60F and 85F, and Aquilo, a drone company out of Fairbanks. (The University of Alaska Fairbanks was one of 10 partners selected recently by the Department of Transportation to help test the integration of drones into the nation’s airspace).

“There are a lot of tinkerers here,” says Philippe Amstislavski, an associate professor at the University of Alaska Anchorage. “The northern spirit is very much about coming up with solutions,”

Amstislavski has developed a mushroom-based biomaterial as an alternative to plastic and is spinning off a company, Rhizoform, to market it. The material is being tested with a local fishing company as a shipping container for frozen fish and, with the Cold Climate Housing Research Center in Fairbanks, as insulation. Amstislavski says it can also serve as a bio-covering for permafrost to slow its melting and release of greenhouse gasses.

Alaska’s new entrepreneurial energy is the product of many efforts. The Boardroom, a coworking space that opened in downtown Anchorage five years ago, has become a hub of activity with more than 150 members. The 49th State Angel Fund, a public-private partnership created by the municipality of Anchorage, has catalyzed almost $20 million in investment capital for Anchorage ventures. And the University of Alaska in Fairbanks and Anchorage and the smaller Alaska Pacific University have helped nurture an entrepreneurial ecosystem.

A new ocean-focused incubator called Blue Pipeline is forming in Seward. Alaska has more coastline than the lower 48 states combined. “There is potentially as much economic value in the ocean economy in Alaska as there is in oil,” says Nigel Sharp, the global entrepreneur in residence at University of Alaska Anchorage’s Business Enterprise Institute.

Sharp also views space as a growth opportunity in the Last Frontier, as Alaska is known. “The future of humanity may rest on space exploration, an extreme cold climate,” he says.  Alaska “is a natural test ground for that.”

Village-scale financing

Among the most successful arctic tech startups to date is Anchorage-based 60 Hertz, a member of Launch Alaska’s first cohort. The company’s mission is to address rural energy poverty in Alaska and the Arctic.

The company’s software helps manage remote microgrids—which in Alaska might mean a couple of diesel generators in a shack wired to local homes and overseen by a villager with little training. 60 Hertz’s checklist software and gamified training ensure that these local generators are properly maintained and less prone to break down.

Diesel is a dirty reality in remote Alaska. It is still the cheapest source of energy—a big factor when many rural, mostly indigenous residents spend half of their income on energy.

60 Hertz and others working to transition to cleaner sources must grapple with long, dark days that limit the usefulness of solar. Wind turbines can be difficult to install in fluctuating permafrost. The biggest obstacle may be funding village-scale renewable projects. State grants for such projects have dried up since the recession began three years ago.

60 Hertz founder & CEO Piper Foster Wilder sees an opportunity to create a fund to  vet small-scale renewable energy projects and bundle them into a vehicle attractive to investors, who benefit from renewable energy tax credits.

It’s a boutique version of financing that exists for large scale renewable projects. So far, Foster Wilder has a project finance pipeline of about $15 million, spanning new wind and solar installations, waste heat recovery projects and optimization of existing renewables.

Many of the Arctic tech solutions have application to other remote, extreme regions with similar energy needs. “Alaska is an excellent proxy for the developing world,” says Foster Wilder. “This is a great place to pioneer solutions that are relevant globally.”

Economists forecast Alaska will pull out of its recession early next year. But climate challenges, for Alaska and the rest of the planet, are not going away. As Alaska’s state motto goes: North to the future.