The Hydropower Regulatory Efficiency Act of 2013: A Misguided Attempt to Bring Hydropower to the Forefront of the Renewable Energy Landscape

October 9, 2013

Tuesday, October 8, 2013, by Matthew Spangler

Abstract

On August 9, 2013, the President signed into law the Hydropower Regulatory Efficiency Act of 2013, intended by the House to “facilitate[] the development of new hydropower resources in the United States by streamlining the federal licensing requirements for small hydropower projects and qualifying conduit hydropower facilities.”
The Act, while an encouraging example of bipartisan clean energy legislation, fails to adequately address the fundamental impediments to optimizing existing hydropower resources, along two primary lines. The Act’s most notable impact involves the deregulation of an admittedly under-researched source of small hydropower: conduit facilities. At the same time, it almost completely ignores the existing regulatory barriers to the well-recognized and better-understood source: existing non-powered dams (“NPDs”). Interestingly, this puzzling failure does not appear attributable to the legislative process.

History and Regulation of Hydropower

President Obama made it very clear in his Second Inaugural Address that climate change and sustainable energy were major priorities for the nation. In the Climate Action Plan that followed, Obama proudly touted his Administration’s success in doubling “generation of electricity from wind, solar, and geothermal sources.” Eerily absent from this celebration of renewable energy sources was hydropower.
Modern American hydropower was born in the late nineteenth century, when water turbines were first combined with generators to harness electricity. Soon thereafter, hydropower rose to a prominence, eventually accounting for over 40% of our nation’s electricity. Now, however, hydropower only contributes around 8% of our nation’s power, although this is still more than all other renewable sources combined. Over the past half century, the industry has been stifled by a cumbersome federal regulatory regime, largely arising in response to environmental concerns and legislation.
The Federal Energy Regulatory Commission (“FERC”) is the exclusive authority for all non-federal hydropower licensing in the United States. One common element of the FERC licensing regime, the “exemption” process, is largely responsible for holding back future small hydropower development. Exemptions provide only a marginal break to potential developers, who still have to submit a lengthy application and consult with countless various agencies and interested parties. Unfortunately, these licensing requirements ultimately serve as a strong financial disincentive to pursue small hydropower, as the costs of compliance can exceed the cost of actually installing the hydroelectric technology.

The Potential for Small Hydro

So, why do these regulatory impediments matter? Well, as the 2013 Act notes, “hydropower is the largest source of clean, renewable electricity in the United States.” Two existing sources of small hydropower could help realize this potential: non-powered dams (“NPDs”) and conduit facilities.
First, only 3% of the approximately 80,000 dams in the United States currently generate hydropower. One DOE-sponsored study concluded that retrofitting existing dams with small hydropower generators could increase hydropower production by 12 gigawatts (that’s 15% of the current production). Another study estimated that up to 60 gigawatts could be developed by 2025 from NPDs. Best of all, installation at NPDs avoids many of the negative environmental impacts typically associated with hydropower, as the dams are already in place.
Another potential source for future low-impact hydropower generation comes from tapping into existing man-made water conduits in a variety of ways. However, in stark contrast to the breadth of knowledge on the potential from NPDs, there has been little comprehensive research on how much energy could be harnessed from conduit systems. What research has been done comes from a study of only 373 federally-owned reclamation canals.

The Hydropower Regulatory Efficiency Act of 2013

The Act’s most notable impact involves the deregulation of an admittedly under-researched source of small hydropower: conduit facilities. At the same time, it almost completely ignores the existing regulatory barriers to the well-recognized and better-understood source: existing non-powered dams.

The 2013 Act attempts to address these issues head-on, but does so in a misguided way. First, it is worth noting that the circumstances surrounding the Act’s passing, which are perhaps as significant as its attempted substantive changes to the hydropower licensing process. In a rare example of bipartisan support, the 2013 bill was cosponsored by five democrats and four republicans. In addition to its bipartisan political support, the bill was also endorsed by a wide variety of often-conflicting interests, including FERC, the National Hydropower Association, and American Rivers. The 2013 bill unanimously passed the house, 422-0. As the Senate chairman of the Committee on Energy and Natural resource noted, “you almost feel like the vote took place in an alternative galaxy because it is hard to imagine anything passing 422 to nothing.” The bill similarly emerged from a laudatory Senate hearing unanimously supported before heading to the President’s desk. That the Act was also never amended from its introduction in June 2012 through its enactment in August 2013 is further testament to the unflinching support it received, and the willingness of both political parties to move forward on clean energy legislation.
Turning to its substance, the Act’s biggest impact comes from Section 4, which exempts qualifying small conduit facilities (under 5 megawatts) from all FERC licensing procedures. This is an extreme deregulation, effectively removing the primary financial and temporal impediments to developing this type of small hydropower. At the same time, Section 7 directs the DOE to further study the potential for conduit hydropower projects. While this is certainly a prudent step, it’s strange that the Act goes so far to remove all control over the very technologies that it admits to knowing so little about.
The only major substantive change for NPDs comes from Section 3, where it increases the maximum size of facilities that can qualify for a traditional FERC licensing exemption from 5 to 10 megawatts. This measure does absolutely nothing to actually modify or lighten the onerous requirements imposed by the exemption qualifying process for NPDs. As a result, the primary hurdle to harnessing the potential of existing NPDs is left entirely intact.
This begs the question, why was such a critical source of hydropower given the cold shoulder when its poorly understood and likely less-significant cousin was lavished with unquestioned deregulation? A logical answer is particularly elusive…
First, this treatment does not align with either the available body of research, or the Act’s official findings or stated objectives; Congress repeatedly emphasized the understood potential for NPDs, far more than it did for conduits. Further, Congress’s willingness to extend a near total exemption to some nonfederal conduit facilities demonstrates that it is not specifically opposed to that type of deregulation as a way to foster small hydropower. Finally, the unflinching support that the bill received raises even more questions. Since the bill passed though both houses completely unamended, it is reasonable to conclude that no provisions were ever introduced that could have substantially improved the viability of NPDs. Perhaps this critical omission was intended to ensure that the bill would remain uncontroversial and thus have a better chance of passing. If this was the case, the bill’s sponsors were sitting on a stronger hand than they knew, and they bet far too low.
The Hydropower Regulatory Efficiency Act of 2013 was by no means a failure; its overwhelming bipartisan support indicates an increased acknowledgement of the realities of climate change and the necessity of energy independence, achievable by encouraging low-impact energy technologies. Beyond this, though, it was a flimsy attempt to effectuate any real changes to hydropower’s position in the American clean energy landscape.