That's big bucks for the Dry Creek Sawmill, 45 miles east of Tok, a profitable sawmill with a working dry kiln, in a region where extreme subzero temperatures are common in winter months.

It's also part of a larger plan in the works by the Alaska Energy Authority and Alaska Village Initiatives to boost the stability of rural economies, while enhancing moose habitat critical to subsistence lifestyles. If grant funds allow, the Dry Creek Sawmill will be testing the system, designed by a Colorado firm, to see how it stands up in extreme cold.

"We have a tremendous opportunity to link integrated approaches to management of habitat and forest and reduction of the cost of energy in rural Alaska," said Bill Wall, a veteran wildlife biologist with Alaska Village Initiatives. "It is quite possible that over the next 10 to 15 years to see this happen. It is very exciting for us."

If it comes to fruition, the project would replace cut timber with vegetation conducive to moose habitat in an effort to bolster the animal's population.

The key to the project's success lies with a BioMax power system, produced by Community Power Corp., in Littleton, Colo., and its ability to use woody biomass fuels, including wood chips and sawdust, to provide energy otherwise fueled by diesel generators. While the project is in the research and development stage, the technology has already proven effective for diesel generation systems, requiring no modification to those systems, said Tom Harris, president and chief executive officer of Alaska Village Initiatives.

"This will displace up to 70 percent of the fuel needed to operate the system, using a locally grown fuel to displace imported fuel," he said. Harris added that waste heat would be recycled to re-dry wood chips or to heat the community's water supply.

John Squires, a partner in the sawmill at Dry Creek, which was founded by missionaries in 1973, sees the technology as a valuable wave of the future. "I would see the project being something of value to Alaska, especially small communities that have trees and a small sawmill," he said.

His company is already is using a sawdust-fired boiler to heat the lumber drying kiln. The boiler, which draws about 7 kilowatts of power, also has electric motors that run fans and augers to get the sawdust into the machine, and a stirrer to keep the sawdust fluffed. In all, the mill uses about 800 gallons a month of diesel fuel at $1.45 a gallon, he said. "If we could create that electricity out of wood chips, it would be an interesting project," he said.

Location makes Dry Creek ideal for project

The Alaska Energy Authority and Alaska Village Initiatives chose Dry Creek to work with because it has a successfully operating sawmill in a rural community with access to the highway system.

It is also, according to Squires, the only community on the Alaska Highway system near the Canadian border that does not have grid power available. The power lines from Delta stop at Saw Mill Creek, about 16 miles east of Delta Junction, and the power lines from Tok stop at Dot Lake, 17 miles east of Dry Creek. "That's almost a 40-mile stretch of no power lines," he said.

While Dry Creek lacks access to power lines, it has plenty of biomass, i.e. sawdust and wood chips.

"The biomass is right there, and they have a disposal problem," said Peter Olsen, executive field director of Alaska Village Initiatives.

"It's not really a question of whether it will work. The technology has been proven, (but) people are not going to abandon putting diesel fuel in generators in favor of this unless they are absolutely positive it is going to work."

Assuming the sawdust does work as a viable fuel, Dry Creek and other communities interested in using such a system would have to be assured of a reliable supply of sawdust or wood chips. "In Alaska right now we don't have a chip economy," Olsen said. "We have to jump start that kind of interest. The producer has to know he has a reliable demand for it."

Assuming grant applications and other funding approaches go smoothly, installation of the BioMax unit at Dry Creek would come in late fall or early winter of 2006, he said. Meanwhile, a feasibility study is also under way for a wood chip boiler at a school in Delta Junction.

"We could do something similar for Tok," Olsen said. "If you have three or four facilities that require wood chips, then you have a wood chip economy. Then you could get someone to produce the chips. Once there is someone producing the chips, it's a lot easier to say 'let's put another one in here.'

"It's kind of a chicken-and-egg thing. Then you have the momentum for this thing to take off," he said.

Beyond the savings on diesel fuel, there is also a significant environmental benefit, Olsen said. "The net effect of carbon dioxide using wood chips is zero. It is good for reducing greenhouse gas emissions."

The program Alaska Village Initiatives is planning would also involve planting trees to replace cut timbers, with an emphasis on aspen, willow and other species that grow fast and provide quality forage for moose. Given the spin-off benefits of clean air and growing the economy, "we are all very excited about it," he said.

Since planned reforestation would likely attract wolves and bears along with moose, efforts would have to be made to create a balance between the number of moose and predation, Wall said. "Wolves gets all the press, but black bears have significant impact on moose populations too, by taking moose calves," he said.

Assuming such balance is achieved, the economic effects would be significant, said AVI's Harris. "Every pound of protein produced locally means there are now $5 available to meet other needs," he said. "Eight hundred pounds of moose meat equals $4,000 introduced into a household for other uses."

Harris said he hopes to have the demonstration project up and running by the winter of 2006-2007, most likely with federal funding.

"This is more than simply a way to heat a house," he said. "We are very hopeful that this process will encourage a better relationship between rural and urban entities."

Mike Harper, deputy director of the Alaska Energy Authority's rural energy group, agreed. "Dry Creek represents a good group of business folks, and if it works, we'll take it to Tetlin and see if it works there," he said. "It's a community affair that's really positive."