FERC OK's Testing New Kinetic Hydropower Plant in New York City's East River

The Federal Power Act normally requires any hydropower project that impacts interstate commerce to obtain a FERC license, which can take up to three years to issue. Under FERC's traditional test, a project is deemed to "impact" commerce when it either supplies or displaces even a diminutive amount of power into the grid. In the absence of FERC's ruling, Verdant's
six-unit deployment and supply of power would have been found to impact commerce and Verdant would have required a license.

As the Verdant case demonstrated, FERC's strict license requirement created a "catch-22" for developers of emerging kinetic hydropower technologies, who often need to install their projects to study and evaluate their efficiency and impacts, in order to complete a license application. By allowing tidal and wave developers to move forward with experimental projects, without obtaining a full license, FERC's order will facilitate collection of data that can help FERC make a reasoned decision on whether or not to grant licenses.

In a separate concurrence, Commissioner Kelly recognized that the Federal Power Act's licensing requirements were never intended to apply to experimental projects. Kelly explained:

"Verdant Power's project is experimental and the facilities are to be utilized for a short period of time for conducting studies necessary to prepare a license application. Second, the very nature of Verdant's project is one that requires a 'jump start' from the grid, in order to be tested...the potential for displacement of grid power is a necessary consequence for demonstration."

This decision clarifies and supports the FERC Commissioners earlier "Verdant ruling" of April 13th and the FERC news release "Commission Order Aims to Promote Development of New Submarine Hydropower Technology." In that release, former FERC Chairman Pat Wood stated "The Commission did its part to encourage the development of new electric generation technologies by providing regulatory relief. We need to ensure that new ideas are fostered and not impeded by existing requirements."

It bears noting that FERC's order does not permit Verdant to move forward without any regulatory oversight. Even though Verdant has been relieved, for now, of obtaining a license, it still must comply with New York State permitting requirements.

Barring further delays, the turbines and associated hydroacoustic arrays for monitoring fish and other aquatic species, will be deployed in two phases. The first deployment will include two turbine units, and at least 12 hydroacoustic transducers (planned for November 2005) focused on these two turbines and on far field fish movements, upstream and downstream, of the turbines.

"FERC has taken a solid look at the facts and delivered an insightful decision;" stated Trey Taylor of Verdant Power. "While this decision covers the narrow regulatory issues associated with our project, it also represents a broader look at the issues surrounding the deployment of new emerging kinetic hydroelectric generating technologies that have very low, or virtually no environmental impacts."

Carolyn Elefant, CEO of OREC, a trade association for the ocean energy industry, was pleased that Verdant had won this important precedent, and is cautiously optimistic about its future impacts. Said Elefant "FERC's decision, while extraordinarily beneficial to Verdant and other similarly situated kinetic hydropower developers, is also limited to a narrow set of facts. As I read FERC's order, jurisdictional wave and tidal projects can escape, or defer, licensing only for a short time, only when the project does not generate revenue, and only where the purpose of the experiment is to gather data that will ultimately be used in support of a license application. To read FERC's order as granting a full exemption from licensing for wave, tidal and other experimental projects would be inaccurate. FERC's order is therefore a start, but much still remains to be done to expedite and streamline the permitting process for wave and tidal projects. We're on the verge of a new era in electricity production-our laws and regulations are reflecting the environmental and efficiency benefits we will soon gain."