Senate Hearing on Hydropower Gave Lawmakers the Knowledge to Act

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Senate Hearing on Hydropower Gave Lawmakers the Knowledge to Act

DATE:

January 31, 2022

BY:

Gia Schneider, Co-Founder and CEO, Natel Energy, Inc.

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Senate Hearing on Hydropower Gave Lawmakers the Knowledge to Act

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While the fate of the Build Back Better Act remains uncertain, the positive reception of the January 2022 Senate Energy and Natural Resource (ENR) Committee hearing on hydropower demonstrated that bipartisan support could still drive much-needed enhancements to our nation’s hydropower fleet.

In the first ENR hearing dedicated to hydropower in over a decade, testimony from public and private sector hydropower experts encouraged lawmakers to acknowledge the need for hydropower licensing reform, continued renewable energy tax credits, and increased environmental performance across the industry.

As a developer of sustainable, low-head hydropower projects enabled by environmentally-focused technologies, I was heartened to see the Senators’ responsiveness. Bringing hydropower licensing timelines and tax incentives in line with those of wind and solar will accelerate our nation’s transition to a zero-carbon economy.

THE DEEP DIVE

Below are my 3 takeaways from the hearing and recommendations for how lawmakers can support a robust hydropower industry in service of a net zero future.

Licensing must accelerate to meet climate goals

Underscored by findings from the National Renewable Energy Laboratory’s (NREL) recent examination of the federal authorization process, the hearing highlighted how much of the existing hydroelectric fleet faces a looming mountain of relicensing.

As emphasized by the testimonies of both NHA President and CEO, Malcom Woolf, and Acting Director of the US Department of Energy’s Water Power Technologies Office, Jenifer Garson, by 2030, over 30% of the non-federal fleet will need to seek relicensing or risk decommissioning.

This threat is exacerbated by relicensing timelines that are both unsustainable (greater than seven years on average) and slow — even in comparison to the nuclear fleet’s permitting process, as detailed by comments delivered by Scott Corwin, Executive Director of the Northwest Public Power Association.

Hydropower has the potential to be a key enabling technology for our national and global transition to a net zero emission grid. According to the International Energy Agency, of all electric power technologies, hydropower provides the most system flexibility. But to avoid the most catastrophic effects of climate change, we must dramatically reduce emissions on a rapid timescale.

Source: IEA (2021b), Net Zero by 2050: A Roadmap for the Global Energy Sector.

The relicensing process — as well as the process for original licensing — are out of step with this reality. While there have been recent efforts to accelerate permitting, NREL’s study found that 90% of projects seeking original licenses abandon their efforts prior to a license being granted.

For hydropower to unlock its full potential to combat climate change alongside wind and solar, licensing timelines must improve.

Hydropower is a renewable energy source — and tax incentives should reflect that

In their testimonies, both Mr. Corwin and Mr. Woolf called out the need to place hydropower on an equal tax credit playing field with other renewables. Passage of the Bipartisan Infrastructure Framework (BIF) was a tremendous step toward this goal, but the continuation of the former 30% investment tax credit (ITC) and the 30% “environmental improvements” ITC are both in limbo as part of the Build Back Better Act.

While hydropower is an incredibly efficient, long-lasting resource, upfront capital requirements can be cost-prohibitive. As Mr. Woolf noted, the funding included in the BIF is comparable to a down payment: for a hydropower project pursuing environmental improvements at an existing site, up to $5 million per year can be awarded under the Department of Energy’s new 247 program.

For a hypothetical $100 million project, this grant funding would cover a materially significant portion of these improvements — but a 30% ITC with a direct-pay option would bring project financing in line with what is available to other renewables.

Funding environmental improvements pays long-term dividends

As the International Hydropower Association President Roger Gill has highlighted, “There is no excuse for building a hydropower system that is not sustainable.” This sentiment was echoed by all four of the hearing’s witnesses, with the message that federal funding helps both to develop new, greener technology and to enable its adoption.

Funding for both research and implementation of environmental improvements (as in the BIF section 247, which awards funding to projects that improve fish passage, sediment transport, water quality and recreational access) will move the industry’s needle toward true sustainability.

One opportunity for more sustainable water resource management was highlighted by Camille Touton, Commissioner of the Bureau of Reclamation, in her discussion on aquifer recharge. Touton described how Reclamation is currently deploying BIF-funded programs for technical and financial assistance for groundwater recharge, aquifer storage and recovery projects, and water source substitution for aquifer protection projects.

Hydropower can be an enabling technology that goes beyond renewable power generation to incorporate strategically sited natural infrastructure that can distribute water throughout floodplains to increase water retention and storage.

Public programs such as what Reclamation is championing are critical for encouraging private sector innovation, and can help make a difference toward translating water resiliency concepts into reality.

WHY IT MATTERS: BUILDING MOMENTUM

By all accounts, Senators’ responses to the testimony presented to the committee indicated there is continued bipartisan support for hydropower as a reliable, renewable energy source.

As an industry, we can build on this success to encourage lawmakers to:

  • Hold future hearings dedicated to reforming the hydropower licensing process
  • Support passage of an iteration of the Build Back Better Act inclusive of the current clean energy tax incentives
  • Continue to fund initiatives dedicated to improving the sustainability and resiliency of our existing hydropower fleet
  • Provide incentives to expand the fleet to include new solutions that improve water resource management

The positive reception that the hydropower industry received from Senators was not a coincidence — thanks to the dedicated efforts across industry, agencies, and conservation organizations, aided in part by Stanford’s Uncommon Dialogue, the hydropower community has a solid basis of respect.

Momentum is on our side to keep pushing for a cleaner, greener future.