RE Outlook 2003 – According to data recently released by the Energy Information Administration (EIA), electricity generated in the United States from hydropower has dropped significantly. For the first time in 10 years, hydropower was not America’s leading renewable resource, as consumption from hydropower resources fell 23 percent.RE Outlook 2003 – January 17, 2003 – According to data recently released by the Energy Information Administration (EIA), electricity generated in the United States from hydropower has dropped significantly. For the first time in 10 years, hydropower was not America’s leading renewable resource, as consumption from hydropower resources fell 23 percent. Overall, total Renewable Energy consumption fell 12 percent. These facts should greatly concern federal and state policymakers, as well as America’s energy consumers. The decline in hydropower resulted primarily from a lack of water in the western states, which is a problem that obviously ebbs and flows due to ever-changing climate conditions. However, there are other serious issues facing hydropower that worsen the impacts of dry years and diminish the positive effects of those years where water is plentiful. These issues include hydropower licensing reform, incentives for new hydropower generation and funding for new hydropower technologies. These issues are not new to policymakers, however, substantive action on them has been elusive for a number of years. Without successful action in 2003, hydropower may very well face a crisis, jeopardizing its ability to provide clean, reliable, domestic, emissions-free energy to America’s energy consumers. Hydropower Licensing Reform First and foremost, the hydropower licensing process needs to be reformed. While the Federal Energy Regulatory Commission (FERC) is presently engaged in a rulemaking to address many problems with the licensing process, legislation is still needed to address the fundamental problems that have plagued the process for so long. Legislative reforms are needed to compliment administrative reforms – only this two track approach will resolve the most pressing concern facing the industry. Most important, time is running out – within the next 14 years, over half of all non-federal hydroelectric capacity must undergo the relicensing process, and for many, that process will soon begin. This includes over 300 projects in 39 states and over 32,000 MW of capacity, much of it in western states where power supply and water issues are of concern. While there are many perspectives, all stakeholders agree that the licensing process is in need of improvement. A multitude of statutes, regulations, agency policies and court decisions have made the process time consuming, costly, contentious, duplicative and generally frustrating for all. A typical hydropower project can take eight to 10 years to weave its way through the licensing process. Some projects have taken more than 20 years and cost millions of dollars in process costs. The end result is, more often than not, an erosion of operational flexibility, loss of generation capacity and delayed environmental improvements. As both Republicans and Democrats recognized during the 107th Congress, fixing the process through legislative means is absolutely necessary. Enacting legislative reforms to compliment administrative reforms is the best way to bring balance, certainty and transparency to the process. Incentives for New Hydropower Generation at Existing Dams Although there is a large amount of untapped hydropower capacity in the United States, hydropower development has been stagnant, almost nonexistent, for a long period of time. Historically, most proposals designed to encourage new Renewable Energy growth have ignored hydropower and its increasingly marginal economic state due to regulatory costs and capacity restrictions. Over the past two years, however, there was a newfound interest in providing incentives for hydropower development at existing sites. A 1998 resource assessment by the Department of Energy (DOE) concluded that 21,000 MW of additional power from hydroelectric resources could be developed by 2020 – none of which would require the construction of a new dam or impoundment. Of the 21,000 MW, over 4,300 MW of so called incremental hydropower could be developed meeting today’s environmental standards at existing hydropower facilities through capacity additions and efficiency improvements. This is enough power for approximately four million homes – clearly a significant contribution to our nation’s energy supply. Unfortunately, almost none of this potential is being developed. Bringing new hydro generation on line is a capital intensive process. While the costs vary from project to project, new hydro generation – depending on the type of upgrade – runs from US$650 to US$2,500 per kW. While not the same disadvantages as those encountered by other renewable industries, hydro’s disadvantages hold equal merit and demand similar policies designed to encourage the development of renewable sources of power. Providing financial incentives for hydro producers – a concept that is supported by 74 percent of registered voters – will encourage hydropower development at existing sites, allowing the United States to rely more on this clean, domestic resource. Funding for Advanced Hydropower Technology For years, the hydropower industry has been working with the DOE to design, develop, test and deploy a new generation hydropower turbine that improves fish passage, addresses other environmental impacts of hydropower and improves the efficiency of hydro turbines, which are already the most efficient form of energy production. This cost-shared program has been partially funded by Congress. While the hydropower program has historically been under funded by Congress, it has shown significant gains toward achieving its valuable goals. With increased funding from Congress, the program could soon complete its work. This would allow us to deploy valuable new hydro technology and instead focus on other R&D issues which are of concern to the DOE and the hydropower industry. Without such funding, we will have lost a tremendous opportunity to create a more vibrant future for the industry and bring substantial new improvements to hydro’s environmental performance. About the Author: Mark R. Stover is the director of government affairs for the National Hydropower Association. He has been with NHA since 1999 and has been associated with the electric power industry since 1996. NHA is the only national trade association exclusively representing the interests of the hydropower industry. Its 120-plus members include investor-owned utilities, publicly-owned utilities, independent power producers, equipment and service providers, engineers, consultants, attorneys and others associated with the hydropower industry. NHA is based in Washington, DC and represents 61 percent of domestic, non-federal hydroelectric capacity and nearly 80,000 MW overall in North America. He can be reached at email@example.com.