A Review of 2008 FERC Filings: Hydro Development Interest on the Rise

A review of Federal Energy Regulatory Commission preliminary permits issued during 2008 reveals proposed hydro development of more than 15,000 MW. The number of preliminary permits filed is expected to continue to increase in 2009, given the federal government’s support for renewables.

By William B. Dickinson IV

Spurred by federal and state incentives, U.S. developers proposed hundreds of new or expanded hydroelectric projects to the Federal Energy Regulatory Commission (FERC) during 2008. Many of the notices and orders issued by FERC were for hydrokinetic projects proposed for the Mississippi, Missouri, and Ohio rivers, and for offshore ocean sites.

During 2008, FERC issued nearly 400 notices and orders for preliminary permits, licenses, and amendments that involved some kind of growth-related development activity. Of those, the commission issued more than 240 preliminary permits, representing proposals to develop 15,460 MW of new installed capacity. That’s nearly five times the 50 preliminary permits issued for all of 2007.

FERC said it issued 120 preliminary permits during 2008 to developers wanting to study proposed hydrokinetic projects. It issued about three dozen preliminary permits for hydrokinetic projects in 2007 and just one in 2006.

At the end of 2008, FERC records showed the commission had formally accepted another 60 preliminary permit applications totaling 9,800 MW, but had not yet acted on them. At least half were applications to study hydrokinetic projects.

The preliminary permit, the first step in the hydro licensing process, does not allow construction. Instead, it maintains the permit holder’s priority over potential competitors to apply for a development license. The permit holder has three years to study a site and makes financial arrangements necessary to apply for a license.

Examples of interest in hydro development

Developers granted permits in 2008 to study hydrokinetic projects include Free Flow Power Corp., which is pursuing river-current projects in the Mississippi, Missouri, and Ohio rivers. Hydro Green Energy LLC, another developer, holds permits to study river-current projects in New York, Alaska, and in the Mississippi River. Hydro Green recently installed a hydrokinetic power unit at the city of Hasting’s 4.4-MW Mississippi Lock and Dam No. 2 project in Minnesota. (See “The Leading Edge” department.)

Another developer, Grays Harbor Ocean Energy Co. LLC, filed preliminary permit applications with FERC in October 2008 to study the feasibility of ocean wave energy projects off the coasts of six states: California, Hawaii, Massachusetts, New Jersey, New York, and Rhode Island. FERC granted the company a preliminary permit for another project, 6-MW Grays Harbor Ocean Energy, in the Pacific Ocean off the coast of Washington, in 2008. Pacific Gas and Electric Co. already holds permits to study two 40-MW ocean wave projects in California.

Hydropower operator Brookfield Power created affiliate BPUS Generation Development LLC in 2008 to expand its development of new projects. During 2008, the company received preliminary permits to study more than two dozen projects totaling 467 MW. BPUS Generation also is pursuing development of pumped-storage projects. It filed applications for preliminary permits in 2008 for the study of several pumped-storage projects, including 1,040-MW Banks Lake, 1,150-MW Duffey Lakes, 1,340-MW Little Potlatch Creek, and 1,100-MW Umtanum Ridge. Those applications are pending.

What’s in store for 2009?

The number of filings for preliminary permits could increase yet again in 2009, given the federal government’s support for renewables. In October 2008, Congress renewed expiring production tax credits for renewable energy including incremental hydropower resulting from additions or upgrades to existing plants, and projects installed at non-hydropower dams. The legislation also expanded the list of eligible renewables to include ocean, tidal, and instream hydrokinetic technologies and extended the Clean Renewable Energy Bond program for renewable energy projects by public power utilities.

An $825 billion economic stimulus package unveiled by Democrats in the U.S. House of Representatives in January 2009 contains billions of dollars in tax breaks for renewable energy and spending for energy efficiency and transmission.

In addition to federal incentives, several states have adopted renewables portfolio standards benefitting hydro.

Will Dickinson is a senior associate editor for PennWell Corporation.

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