Panelists Detail Benefits Of Hydropower, Recommend Congressional Actions
January 20, 2022
by Paul Ciampoli
APPA News Director
January 21, 2022
Panelists appearing at a recent Senate Energy and Natural Resources Committee hearing detailed the key role that hydropower plays in the nation’s power supply mix and outlined actions that lawmakers could take to support hydropower going forward.
The committee heard from Jennifer Garson, Acting Director for the Water Power Technologies Office (WPTO) in the Department of Energy’s (DOE) Office of Energy Efficiency and Renewable Energy, Camille Touton, Commissioner for the Bureau of Reclamation, Scott Corwin, Executive Director of the Northwest Public Power Association (NWPPA), and Malcolm Woolf, President and CEO of the National Hydropower Association (NHA). NWPPA is a member of the American Public Power Association (APPA).
The majority of committee members at the Jan. 11 hearing, including Chairman Joe Manchin (D-WV) and Ranking Member John Barrasso (R-WY), highlighted the benefits of hydropower.
“Unlike most other renewable energy resources, hydropower generation provides baseload electricity,” Manchin noted in his opening remarks at the hearing. “It’s also flexible which means that the generation capacity is available when we need it, and it has the ability to respond to changing grid conditions and adjust output accordingly.”
That makes hydropower “unique and valuable for maintaining grid reliability as more intermittent resources come online,” he said.
“Given the baseload attributes of hydropower, we need to make sure our existing capacity remains operational,” Manchin said.
He noted that between now and 2030, 281 facilities that represent nearly 14 gigawatts of hydropower generation and pumped storage hydropower capacity are up for Federal Energy Regulatory Commission relicensing, which is close to a third of all U.S. non-federal hydropower capacity.
“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 said.
“The bipartisan infrastructure bill that President Biden signed into law in November made a historic investment in new and existing incentives for new hydropower production, efficiency upgrades, and infrastructure and environmental improvements,” Manchin said.
The bill also included $8.2 billion for western water infrastructure at the Bureau of Reclamation, which included investments in aging infrastructure and hydropower facilities. These resources will help to ensure that we keep vital hydropower capacity online, Manchin pointed out.
For his part, Barrasso noted that until recently, hydropower was the nation’s largest source of renewable energy.
“Hydropower can once again be our largest source of renewable energy if we maintain our existing hydroelectric dams and encourage the installation of turbines on our nation’s non-powered dams,” he said.
“Hydropower’s clearly an important component of an all of the above energy strategy. We should encourage more hydropower generation,” Barrasso said.
Meanwhile, in his prepared testimony for the hearing, Corwin said that while hydropower “is one of our oldest forms of generating electricity it is also a resource for the future because of its unique attributes enabling newer forms of generation. These qualities include a high level of flexibility that matches very well with the increasing need to balance intermittent renewable generation sources such as wind and solar. It lends system stability, reliability, ramping capacity, resilience, and effective integration of other resources.”
Corwin also said in the testimony that it is “efficient in its conversion of energy, uses reliable time-tested technology, and can be relatively low-cost. While extensive use of energy stored in batteries may be in our future, the ability to store the energy of falling water is serving us today and provides the fast response needed on demand. Significant pursuit of development of pumped storage hydropower projects will serve to create even more capacity for meeting peak demand, avoiding reliability events, and balancing other resources.”
NHA’s Woolf pointed out that hydropower “plays an essential yet often-overlooked role in enhancing grid reliability by, for example, providing nearly half of the nation’s black start capability, which is vital in re-starting the grid in the event of a blackout.”
Woolf made several recommendations for Congress to take related to hydropower.
He said that Congress needs to address the hydropower license and relicensing process.
“The uncertainty about the time and cost involved is dramatically at odds with the urgency of addressing climate change and the upcoming wave of hydropower relicensing proceedings,” Woolf said.
Congress should also enact Improvements to promote new renewable generation at existing nonpowered dams, Woolf said.
In 2020, hydropower provided 7.2% of the electricity on the grid, accounting for 37% of U.S. renewable electricity generation, noted Garson.
“With the advent of a greater level of variable renewable generation on the U.S. grid, hydropower’s role is more critical than ever,” she said.
Corwin and Woolf called for federal incentives for hydropower on par with those available to other clean energy resources and stressed the importance of ensuring any such incentives are accessible to public power utilities and rural electric cooperatives.
They thanked Sens. Maria Cantwell (D-WA) and Lisa Murkowski (R-AK) for introducing S. 2306, the Maintaining and Enhancing Hydroelectricity and River Restoration Act of 2021, to create a 30 percent tax credit to support upgrades at existing hydropower dams for dam safety, environmental improvements, and grid resilience enhancements.
They also thanked Senator Ron Wyden (D-OR) for including a narrower version of the tax credit proposed by Senators Cantwell and Murkowski in the latest tax title of the Build Back Better Act, though the legislation is currently stalled.
APPA Submits Statement For the Record
APPA submitted a Statement for the Record to the Committee related to the hearing.
APPA said it supports and agrees with the testimony submitted by Corwin.
“Making full use of the nation’s hydropower resource is key to ensuring that the nation’s grid remains reliable and resilient, and that utilities can meet emission reduction goals,” APPA said.
“Hydropower is a source of emissions-free, base-load power. Furthermore, hydroelectric generators can be started or stopped quickly, which makes them more responsive than most other energy sources for meeting demand for electricity at its “peak” or highest volume,” it said.
APPA noted that there is a significant potential for new hydropower to be generated at non-powered dams throughout the country and to increase output at existing hydropower facilities. “But there are excessive barriers to tapping this potential.”
The Federal Energy Regulatory Commission (FERC) is the primary federal agency responsible for the licensing and relicensing of such non-federal hydroelectric projects, but the process can be lengthy, difficult, costly, and uncertain for applicants, APPA said.
“Critical new additions to existing hydropower facilities are languishing under bureaucratic and often contradictory processes that can span a decade or more or which simply become too costly,” APPA said. The byzantine licensing and permitting processes are also a significant impediment to simply maintaining existing hydropower capacity.”
“We simply cannot afford to lose existing hydropower capacity without threatening to miss emission reduction goals and grid resiliency. Congress must streamline the licensing process by establishing FERC as the lead agency, giving it the authority to set and enforce schedules for the issuance of all resource agency authorizations and studies, and ensure any ‘mandatory conditions’ are directly relevant to the project,” APPA said.
APPA said that another significant obstacle to the growth and retention of non-federal hydropower capacity are insufficient federal tax incentives on par with those available to other clean energy resources.
APPA strongly supports S. 2306, which seeks to address this issue. The bill would create a 30 percent tax credit to support upgrades at existing hydroelectric dams for qualified dam safety, environmental, and grid resilience improvements. “Critically, this credit would be available as a direct payment to public power utilities,” the trade group said.
APPA said it appreciates the efforts of Wyden to include a version of the Cantwell-Murkowski credit in the updated text of the tax title of the Build Back Better Act currently pending in Congress.
Wyden’s draft includes a provision establishing an investment tax credit for five years for “hydropower environmental improvements” at existing hydropower facilities, defined to include investments to improve fish passage, water quality, and habitat maintenance. Importantly, this credit would be available to public power via “direct pay.” Moreover, the draft includes the full value of the production tax credit for building new hydropower at existing dams, marine energy, and other incremental new hydropower, extended for ten years.
Finally, APPA said that federal hydropower and power marketing administrations (PMAs) are critical, though often overlooked, elements of the nation’s power supply.
APPA supports the continued existence and federal ownership of the PMAs and the sale of federally generated hydropower at cost-based rates.
“APPA strongly opposes any efforts to disproportionately assign costs to federal hydropower users for which they receive no additional benefits,” it said, and urged Congress, the Corps, Reclamation and the PMAs to work closely with customers as the system confronts challenges such as the ongoing megadrought in the West.