Hydropower – A New Look at Opportunities for America’s First Renewable Energy Resource

The Environmental and Energy Study Institute (EESI) and National Hydropower Association (NHA) invite you to a briefing on the role of hydropower in meeting U.S. climate and electric grid reliability and resiliency goals. In 2018, hydropower was the largest generator of renewable electricity in the United States. Beyond the benefit of providing clean, renewable energy generation, hydropower and pumped storage can also be a strategic partner for other, variable renewable energy resources. Pairing hydropower with wind and solar can help them achieve greater penetration and integration while optimizing grid performance.

HIGHLIGHTS

Jeff Leahey, Deputy Executive Director, National Hydropower Association (NHA)

• NHA works to champion hydropower as America’s premier carbon-free renewable energy resource and inform public policy to protect, enhance, and expand hydropower within the U.S. electric system.
• Hydropower is America’s oldest renewable energy source. Hydropower is a reliable and resilient energy resource with many benefits: it is carbon-free, has long-term storage capacity, and is able to ramp generation up or down quickly in response to consumer demand and to offset variable energy resource production (e.g., wind and solar). Other unique benefits of hydropower projects include: flood and drought management, crop irrigation, water supply, environmental protection, and recreational opportunities.
• Wind and solar energy have been prioritized in tax policy support over the past decade, which has helped them grow faster than other renewable energy sources. Thanks to this policy support, wind surpassed hydropower in capacity (or maximum possible energy output) in 2016.
• Despite weaker policy support and flat growth over the past decade, hydropower is still America’s top generator of renewable energy (though its potential is lower, hydropower actually generated more electricity than wind). In 2018, hydropower made up 7 percent of total U.S. electricity generation and 39.5 percent of renewable electricity generation (wind came in second at 37 percent). Hydropower is also extremely important to energy storage—hydropower’s 23 GW of pumped storage makes up 95 percent of U.S. energy storage.
• Hydropower energy generation has tremendous growth potential through multiple avenues: adding capacity at non-powered dams, expanding existing facilities through upgrades and efficiency improvements, and tapping into new potential marine and hydrokinetic resources (such as tidal streams, ocean and river currents, and waves).
• The Department of Energy's new report, Hydropower Vision: A New Chapter for America's 1st Renewable Electricity Source, finds that new and improved hydropower could generate an additional 26 GW by 2030 and 50 GW by 2050. Only 3 percent of America's 80,000+ dams are powered.
• Federal and state policies that aren't more supportive and stable, long development lead times, and large up-front capital investment requirements pose significant challenges to hydropower growth. As solutions to these challenges, NHA suggests federal tax policies that properly value the grid benefits of hydropower and incentivize growth; improvements to the regulatory process for hydropower licensing in new and existing projects; and the inclusion of hydropower in clean energy programs such as state Renewable Portfolio Standards.

 

Suzanne Grassell, Governmental Affairs Program Manager, Chelan County Public Utility District

• Chelan County Public Utility District (CCPUD) in Washington State, which serves about 48,000 customers, has three hydropower projects with a combined capacity of 2,000 megawatts. Two of these projects were relicensed in 2006 and 2009, while the third will be up for relicensing in 2028. Hydropower has the longest licensing process of any energy-generating source—relicensing a hydropower facility takes 10-12 years. Because of how long the process takes, CCPUD is already planning and strategizing for the 2028 relicensing. Hydropower is undervalued and held back by antiquated regulations and needlessly long and complicated licensing and relicensing processes.
• There is a dichotomy in hydropower—on the one hand, hydropower is extremely reliable and capable of constant generation, unlike many other sources of renewable energy that are a lot more variable. On the other hand, hydropower labors under old regulatory practices while public policy focuses on emerging energy resources. Even though hydropower comes out on top across the board in potential and has multiple benefits, we’re not necessarily seeing markets value it.
• There is a lot of potential for reinvigorating hydropower: recognizing the market value of hydropower’s attributes and choosing technology-neutral policies for carbon reduction with incentives that treat hydropower equitably; shortening and simplifying the relicensing process; and expanding research and development.
• Recent developments show hope for hydropower’s future: Washington state’s 100 Percent Clean Energy bill recognizes hydropower as a renewable energy resource and America’s Water Infrastructure Act incentivizes early investments of hydropower projects before relicensing.

 

Chuck Sensiba, Partner, Troutman Sanders

• “Hydropower has immense benefits worth protecting and an industry willing to do that.” We should care about hydropower because, as a non-emitting energy source, it is important for the climate; it is functionally flexible through its ability to facilitate and integrate with other renewables; it is a low-cost fuel source; and it has a multitude of other benefits.
• Policy surrounding hydropower needs to be more sensible and less fractured. It is important for decision makers to have a balanced approach to policy-making in the renewable energy sector.
• Recent improvements in hydropower policy include the Hydropower Regulatory Efficiency Act of 2013 (HREA), which authorized the Federal Energy Regulatory Commission (FERC) to grant preliminary permits for up to three years, and established “qualifying conduit hydropower facilities” (up to 5MW) that require no FERC authorization. America’s Water Infrastructure Act of 2018 (AWIA) expanded on these incremental changes by increasing preliminary authorization to up to four years, with a four-year extension; requiring FERC to account for early project investments when establishing new licensing terms, and expanding the HREA 2013 program for “qualifying conduit hydropower facilities” up to 40 MW.
• Further hydropower policy improvements include modernizing hydropower licensing policy by requiring early consultation by federal and state decision makers, designating FERC as the lead agency in the process, and providing a mechanism for schedule discipline. Establishing tax and other development policies that treat all renewable resources equally as well as prioritizing research and development for emerging hydropower and marine and hydrokinetic technologies (in addition to existing hydropower) are also important steps to build on the success of hydropower.

 

Matt Swindle, Chairman and CEO, NLine Energy

• The first renaissance of hydropower began in the mid-19th century with the invention of the Francis reaction turbine, the Impulse Pelton Wheel, and the building of the Schoellkopf Power Station in Niagara Falls, NY. By the end of the 20th century, hydropower had experienced another two renaissances and a move to big hydropower through global development and FERC’s 1978 Public Utility Regulatory Policies Act (PURPA), which encouraged the development of hydroelectric power at existing dams. Afterwards, there was a dearth of hydropower development that is ongoing, although the HREA of 2013 and AWIA of 2018 do mark a renewed interest in hydropower development and licensing.
• 2019 marks the beginning of a possible fifth renaissance in hydropower, from new technologies in fish passage and fish friendly turbines (with zero mortality!), new environmentally-sensitive dam designs, and increasing corporate interest in renewable and clean energy projects. Better education on hydropower, especially on new technologies and its benefits to wildlife conservation and environmental protection, will lead to more corporate investment and more sensible regulations.

 

Lori Pickford, Principal, The Ferguson Group (Don Pedro Hydroelectric Project Relicensing Case Study)

• “Hydropower is not the dinosaur of yesterday. If we care about climate, we need to look at hydropower differently.” According to Lori Pickford, if policymakers care about climate, they need to look at fixing the licensing process for hydropower. “If you can build natural gas facilities and wind farms in two years, it should not take ten to relicense existing dams and hydropower facilities.”
• Hydropower, including big dams, is compatible with the Endangered Species Act and the Clean Water Act. The agencies that enforce these laws—including the National Marine Fisheries Service and U.S. Fish and Wildlife Service—need to be held accountable to the same standards as hydropower licensees (such as basing themselves on approved scientific studies and models). This will ensure a smooth and more efficient process and help cut down on the time it takes to relicense projects.
• Since 2011, The Ferguson Group has been trying to relicense the Don Pedro Hydroelectric Project in Central California using the new Integrated Licensing Process (ILP). The ILP tried to make relicensing more efficient by bringing together from the beginning all the people and agencies involved in the process; but because FERC didn’t have oversight over the other agencies, they weren’t able to work in sync towards the same goals, or base themselves off the same science, leading to inconsistent proposals. To improve this, agencies need to be held to the same standards as each other.

 

Paul Gay, Vice President, Strategic Marketing Innovations

• Marine energy is a new, not yet commercialized resource in the United States (except, just recently, in Maine) that represents vast amounts of untapped and predictable power. Marine energy—from waves, tidal ebbs and flows, and ocean/river currents—is being harnessed with new technologies and concepts. Right now, it is hard for anyone to assess the full potential of marine energy, because a lot of the technologies are in development or theoretical.
• Water is 800 times denser than air, so there is inherently a lot more energy to be harnessed from hydropower than from wind power, but that also means it’s a lot harder to capture. Significant federal investment is needed to bring these new marine technologies to market, just as every other source of energy has needed federal investment at its inception—from fossil fuels to solar. Over the past decade, Congress has provided over $120 million in funding for the U.S. Navy Marine Energy R&D program, but more funding is needed to support technology advancement that can lead to private sector verification and utility adoption.
• The federal government can make a big difference. There are bills under consideration to reauthorize the marine energy activities of the Water Power Technologies Office. The industry also depends on grants from the Department of Energy Water Power Technologies Office and the U.S. Navy’s Energy Program. There are no tax policy incentives right now—marine energy depends entirely on grants.
• There are really cool technologies in action right now—there’s a wave energy test facility in Hawaii at a Marine Corps Base, wave and tidal energy research is being conducted in Oregon at the Pacific Marine Energy Center, National Labs (NREL, SNL, PNNL, ORNL) are supporting component testing and modeling of various generators and blades, and the Ocean Renewable Power Company in Alaska is deploying a modified tidal energy device to power a non-grid connected tidal community with 50% renewable power.

 

Opportunities to upgrade and expand the existing hydro fleet, and for new project development, are available across the country. However, challenges holding the industry back from fully realizing this growth, including lack of valuation of hydropower’s benefits in energy and environmental markets and policy; regulatory uncertainty; and disparities in tax policy support.

This briefing will examine the energy, environmental and grid benefits hydropower (and other waterpower technologies, such as pumped storage, conduit power and marine energy) provides, as well as the policy changes needed to sustain hydropower projects and promote continued deployment. For more information, please see NHA’s newly released report: Reinvigorating Hydropower: A cornerstone of our, clean, affordable, reliable electric future.