Exploring New Opportunities in the Hydropower Industry

Partner Chuck Sensiba recently participated in a briefing sponsored by the Environmental and Energy Study Institute (EESI) and National Hydropower Association (NHA), titled, “Hydropower – A New Look at Opportunities for America’s First Renewable Energy Resource.” The panel discussion examined the role of hydropower in meeting U.S. climate and electric grid reliability and resiliency goals. The briefing covered the energy, environmental and grid benefits of hydropower and the benefits of other waterpower technologies, such as pumped storage, conduit power and marine energy, as well as the policy changes needed to sustain hydropower projects and promote continued deployment.

Co-panelists included Jeffrey Leahey, Deputy Executive Director of the National Hydropower Association; Suzanne Grassell, Governmental Affairs Program Manager, Chelan County Public Utility District; Matt Swindle, CEO, NLine Energy; Lori Pickford, Principal, The Ferguson Group and Paul Gay, Vice President, Strategic Marketing Innovations.

Recent Past

In 2018, hydropower was the largest generator of renewable electricity in the United States, making up 7 percent of total U.S. electricity generation and nearly 40 percent of renewable electricity generation. 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 utilities achieve greater penetration and integration while optimizing grid performance.

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, include lack of valuation of hydropower’s benefits in energy and environmental markets and policy; regulatory uncertainty; and disparities in tax policy support.

During his presentation, Sensiba noted that the hydro licensing process takes a long time and that there are some market conditions that don’t favor hydropower and value it appropriately. He believes significant reinvestment costs are needed.

He stated that, “Hydropower has immense benefits worth protecting and an industry willing to do that.” He went on to add that hydropower is important because, as a non-emitting energy source, it is important for our 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 many other benefits.

Hydropower Regulatory Efficiency Act

In looking at ways to resolve the challenges still faced by the hydropower industry, it is important to look at some of the earlier successes that brought about incremental changes in some of the regulatory requirements regarding hydropower. The Hydropower Regulatory Efficiency Act of 2013 established a new type of regulatory mechanism for small conduit projects. Some of these projects are very small, less than one MW, and required full Federal Energy Regulatory Commission (FERC) authorization prior to 2013. Under the 2013 Act, for any projects under 5 MW, FERC authorization is no longer required, relieving a “tremendous regulatory burden.” The 2013 Act also focused on investigating the feasibility of developing a regulatory process for issuing licenses for projects at non-powered dams and closed-loop pumped storage within two years, including a pilot program.

America’s Water Infrastructure Act

The America’s Water Infrastructure Act of 2018 also brought about incremental improvements, aimed at helping new project development with permits and priorities and to protect developers as they do environmental work. It also directed FERC to take the next step with closed-loop projects at non-powered dams by issuing regulations to expedite the licensing of those types of projects. The 2018 Act also directed FERC to recognize that investment in new projects needed to be rewarded and incentivized by longer license terms.

The Future

Sensiba points out that there is an opportunity to continue to build on incremental work that was done in the 2013 and 2018 acts to promote and expedite the licensing of certain types of projects and to prioritize research and development for merging conventional hydropower and marine and hydrokinetic technologies.

As far as what’s next, there are new ideas being set forth in bills introduced in both the House and Senate. Among the proposed solutions in these bills are to modernize the hydropower licensing process by requiring all federal and state decisionmakers to consult early in the process; designating FERC as the lead agency; and providing a mechanism for schedule discipline and to modify existing federal definitions of renewable energy to include hydropower—in all its forms. The bills also strive to ensure that federal decisionmakers at the local level are meeting established statutory requirements and agency policy.

You can watch the full briefing on the EESI YouTube page and find additional information on the briefing here.