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US lawmakers back legislation to speed hydropower relicensing, expansion

18 January 2022 Keiron Greenhalgh

With more than 30% of US hydropower licenses expiring by 2030, key lawmakers in the US Senate are backing legislation to fix the balky relicensing process while also jump-starting the installation of turbines at thousands of dams currently not producing electricity, potentially provid­ing substantial new supplies of baseload clean power.

Without reforms to the Federal Energy Regulatory Commission (FERC) hydropower licensing program, the hydropower indus­try is warning Congress that the US risks losing a large chunk of its existing hydro-electric capacity at a time when President Joe Biden is pushing for decarbonization of the country's generation sector.

The Senate Energy and Natural Resources Committee discussed potential legislative fixes last week at a hear­ing called by Committee Chairman Joe Manchin, Democrat-West Virginia, to highlight the threat posed to US hydropower resources by FERC's time-consuming relicensing pro­cess, which the industry says takes eight years to complete on average.

"Between now and 2030, 281 facili­ties that represent nearly 14 GW of hydropower generation and pumped stor­age hydropower capacity are up for FERC relicensing, which is close to a third of all US non-federal hydropower capacity," Manchin explained in opening remarks on 11 January.

"Between low hydroelectricity prices and the high capital costs of maintenance and retrofits required for relicensing, there is a real possibility that many of these plants could face closure," he added.

Hydropower in 2020 supplied 7.3% of the US' electricity, or 291 billion kWh. This was, by far, the largest source of renewable power in the nation, according to the US Energy Information Administration, as it represented 52% of the total.

In testimony to the committee, National Hydropower Association (NHA) CEO Malcolm Woolf said the industry is drafting a series of reforms to the Federal Power Act to dramatically cut down the time it takes FERC to reli­cense a hydropower facility.

"The time, cost, and uncertainty involved in relicensing an existing hydropower facility is diametrically at odds with the urgency of addressing climate change and the upcoming wave of hydropower relicensing proceedings," he said.

Manchin dubbed the permitting process "absurd" and said it was "a shame" that the US hasn't done more to support the hydro sector.

The current pace of permitting is "glacial," creating a significant hurdle to attracting private investment to the sector, Senator John Barrasso, Republican-Wyoming, said, relating an anecdote that a company told him it could take up to 13 years to build a dam.

Cost of relicensing discourages operators

Huge relicensing costs, combined with the eight years it takes to move through the relicensing process at FERC, are discouraging a large percentage of hydropower operators from even seeking to renew their licenses, Woolf said.

A recent industry survey found that more than one-third, or 36.4%, of hydro­power licensees were "actively consider­ing" shuttering operations and decommis­sioning their facilities, he said.

He said the NHA has been working with numerous environmental, river advocacy, and native American tribal organiza­tions to develop a set of consensus FERC reforms it will present to the committee in February.

Part of those plans involve a two-year permitting process, he said. In addition, Woolf said FERC must be the lead agency, be able to impose hard deadlines, and have the ability to force federal and other agencies to stick to those deadlines. There is currently no process discipline or consequences if agencies don't stick to FERC deadlines, he added.

FERC was unable to provide a response to Net-Zero Business Daily questions 18 January on whether it was working with Manchin or industry on revamping the licensing process.

The US needs to start to think of hydro-electric plant construction in a similar fashion to the way it looks at building a bridge or a road when it comes to the returns, expecting a long-term profit over 50 or 100 years, rather than expecting it to compete with a wind or solar facility, and expecting to see a return within five or 10 years, said Wolff. It was, he said, an "impossible investment climate."

According to a study by the Association of State Dam Safety Officials (ASDSO) in 2019, the average age of the 90,000 dams in the US is nearly 60 years. ASDSO, the Hydropower Reform Coalition, and the Union of Concerned Scientists asked the Biden administration last April for $63.17 billion to support the hydro sector.

Of the 90,000 existing dams across the nation, only about 2,500 can generate electricity, explained Jennifer Garson, acting director of the Department of Energy's Water Power Technologies Office, who said the Biden administration supported turbine instal­lation at those dams where it is environ­mentally acceptable.

Garson cautioned that any decision on whether to retrofit existing dams would need to be made on a "case-by-case basis" and ensure that any modifications would bring those dams up to current environmental standards. The Water Power Technologies Office, meantime, is set to receive $800 million through the bipartisan infrastructure bill, which Gerson said was a "historic level of funding."

But Woolf said the infrastructure bill backing for the sector is "just a down payment," as the funding provided will help 100-200 facilities, but in reality, as many as 2,220 need that same help. Hydroelectric facilities in the US are an "essential part of our climate and clean energy future," he said.

To that end, committee member Senator Dianne Feinstein, Democrat-California, is pushing a bill that calls for a comprehensive federal assess­ment of US hydro resources to help understand their potential and assess which nonpowered dams are most suited to being retrofitted.

Industry officials say pumped storage hydropower (PSH) already is benefiting from a 2019 FERC rule that expedited the per­mitting process for these projects, which use electricity at times of low demand to pump water into an elevated reservoir for eventual release through downhill turbines at times of peak demand.

Utilities and power developers are pro­posing a spate of new PSH facilities to help integrate intermittent power production from solar and wind, which require some form of storage to balance their power output when the wind isn't blowing or the sun isn't shining. The FERC rule was aimed at ensuring that a final licensing decision is made no later than two years after receipt of a completed application.

Congressional help

The hydropower industry had been hop­ing to achieve further reforms through hydropower legislation included in a recent draft of the Build Back Better reconciliation and social spending bill, but that legislation has been stymied to date by opposition from Manchin, a critical swing Democrat in the Senate who voiced concerns about the overall cost of the leg­islation and several of its provisions.

Still, hydropower industry officials praised Manchin and Senator Rob Portman, Republican-Ohio, for championing dam and hydro­power funding in last year's infrastruc­ture bill, although Manchin said funding has been moving slowly to its intended recipients.

Also, Senators Lisa Murkowski, Republican-Alaska, and Maria Cantwell, Democrat-Washington, continue to push a bill to provide expan­sive federal tax credits to entice installa­tion of electricity-generating turbines at dams without such capabilities.

In addition, Murkowski told the hearing smaller operators are "overwhelmed" by the licensing process. The US has not "been able to talk openly about developing smaller run-of-river projects" that could make such a big difference to life in small communities and the climate in general, said Murkowski. "When you take a village off diesel, you are making an extraordinary difference to the quality of life," she added.

Manchin said there is at least 12 GW of untapped hydropower potential in the US—most of which is in Western states—which, if utilized, could nearly replace or double the existing hydro fleet.

"Less than 3% of the dams in the US produce power, leaving thousands that were built for flood control or irriga­tion that could be retrofitted for hydro­power, including several that the Army Corps has identified in West Virginia," he added.

--Based on original reporting by John Siciliano for The Energy Daily, www.theenergydaily.com

Posted 18 January 2022 by Keiron Greenhalgh, Senior Editor

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