The future looks bright for the development of US small hydro. But despite this, some regulatory bodies are still wielding their power to hydro’s disadvantage. Suzanne Moxon reports
Speaking to journalists at the national-hydropower-association’s annual conference in the US, Michael Murphy from E/PRO Engineering and Environmental Consulting reacted angrily to the suggestion that US hydro was a dead industry. ‘Certain areas of the media will have you believe this,’ he said, ‘but it is not true.’
So even when dam removal and fish protection dominate US headlines, and with the hydro industry fighting to reform the regulatory process, does Murphy honestly believe that more hydro power facilities will be developed in the future?
‘I think the answer is yes,’ he says. ‘Admittedly we will not see the construction of large hydro schemes like the Hoover dam but we will see more small hydro.’
Murphy explains that the US has
over 80,000 dams and of these only 2500 have existing hydro power facilities.
‘So there are more than 77,500 dams which may have the potential for hydro power development,’ he said. ‘Retrofitting of low dams that can take turbines, or the upgrading of existing plants which have room for expansion, could be the way forward. And, most importantly, such development would be environmentally benign as the dams already exist.’
Congressman John Shadegg also shares Murphy’s belief about the potential for small hydro. He recently offered an amendment to the Electricity Competition and Reliability Act, fighting to ensure
that small hydro projects were eligible
for credits under the Renewable Energy Production Incentives (REPI) programme. ‘My amendment,’ he told The Energy Daily, ‘makes hydro power projects of 30MW or less eligible for incentive payments of 1.5cents per kilowatt hour.’ The incentive is limited to newly built projects and uses the Public Utility Regulatory Policy Act’s definition of a small hydro power project to establish
a 30MW ceiling. ‘The adoption of
this amendment,’ Shadegg said, ‘should provide a much-needed boost to entities which wish to develop small scale
hydro power projects or install small turbines at existing dams.’
Chris Hocker, president of the National Hydropower Association, believes that REPI will promote the growth of small hydro, but he does not forecast an industry boom, as the US has experienced before. In the late 1970s US small hydro development picked up pace rapidly, prompted by the the Public Utility Regulatory Policy Act (PURPA).
PURPA was born out of the oil crisis of the 1970s and the fear that oil prices would rise astronomically. Consequently, the US government turned its attention
to developing renewables, including hydro power schemes. The first piece of legislation to encourage non-utility construction of power facilities, PURPA was aimed at smaller renewable generators and co-generation. From 1976-96 over 1000 new small hydro plants were put on-line. More than 90% of these were 10MW or less in capacity.
PURPA offered small hydro developers tax benefits and a variety of inducements which made it easier to justify building
a project. But by the mid 1980s wholesale electricity prices started to fall and since then it has become less economically attractive to build small hydro.
‘The problem with the economics of small hydro has a lot to do with the regulatory cost of licensing plants in the US,’ says the NHA president. ‘Sometimes it can be just as, or even more, expensive to license a small hydroelectric facility than it is for a larger scheme. ’
The proposed 4.1MW Enloe hydroelectric dam project on the Similkameen river
in Washington clearly demonstrates the regulatory burden small hydro projects can face. Since 1981 Okanogan County Public Utility District has been pursuing licensed energy capacity at Enloe
dam, which was built in 1919-20. Two licences were issued by the Federal Energy Regulatory Commission (FERC) in the 1980s, only to be rescinded.
A third operating licence was issued
for the Enloe dam project in September 1996. FERC stated that even though
all fish passage issues had not
been resolved, the situation had changed sufficiently to enable it to issue a third licence. The dam owners, as directed by FERC, had consulted with appropriate resource agencies and Indian tribes affected by the project; had conducted studies to support a minimum flow
and other mitigation requirements; and had redesigned project features to
address fish passage problems.
However, in February 2000, FERC rescinded the licence for Enloe dam
for a third time, stating that it did
not think that it would be appropriate
to entertain another application for
the project unless the Commission
was assured that all parties involved were in agreement about providing, installing and funding fish passage requirements.
FERC admits that it was reluctant
to withdraw the licence again. It
had hoped that all parties could
reach agreement about fish passage
conditions which were also acceptable to Okanogan County Public Utility District. ‘Unfortunately,’ said Commissioner Curt L Hebert, ‘the Commission’s hope that this protracted dispute could result
in a mutually acceptable agreement
has now been undermined by the recalcitrance of a single agency [the National Marine and Fisheries Service].’
NMFS used its authority under the Endangered Species Act to minimise
the impact of the Enloe dam project
on protected fish species. Hebert
added that: ‘The Commission no
longer has the discretion to continue to resist NMFS’ overtures. I reluctantly
must concur in the Commission’s
Hebert went on to speak about
NMFS’ role in upsetting the efforts of
other parties to resolve the licence
in a co-operative and non-mandatory
manner. NMFS decided not to work towards a collaborative solution but instead, armed with authority under the Endangered Species Act, insisted on
the construction and operation of a
fish ladder that would render the project uneconomical.
‘But one party, carrying mandatory conditioning authority, and focusing myopically on its own particular interest, can upset the collaborative process if
so inclined,’ Hebert said. ‘To a party opposing licensing, stalemate may mean victory for one party but defeat to
the rest of America.’
Gregg Carrington, the relicensing project manager at Chelan County Public Utility District, believes that the industry has to take the experience at Enloe dam very seriously. ‘Smaller projects in the US are in greater jeopardy if we do not resolve the problems associated with the licensing process,’ he said.