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Engaging in the Energy Conversation

Working in the hydro business to achieve constructive ends sometimes proves quite challenging as the industry runs up against organizations, individuals, and circumstances that frustrate progress. Yet, as a result of collaborative efforts, the hydro industry has in recent years made tremendous strides in engaging opportunities, while facing and addressing obstacles.

An illustration of recent success: In May 2008, the U.S. House of Representatives passed a bill (by a vote of 263 to 160) to provide additional incentives for renewable energy, including hydropower. The House’s Renewable Energy and Job Creation Act of 2008 includes provisions that promise to enable more hydro – i.e., by providing incentives for hydro additions to U.S. electricity supply. As of mid-June, the Senate had failed to advance the act’s provisions – and, in fact, appeared disinclined to do so. Yet, if luck would have it, what hydro could gain through the House-supported legislation is rather remarkable.

Among key provisions affecting hydro, the act:

l   Extends production tax credits (PTC) applicable to qualifying hydropower facilities for three years, through December 31, 2011. [Note: The extension for wind facilities is for only one year.] Qualifying facilities include: “incremental” hydro (i.e., effi- ciency improvements or capacity additions to exist- ing projects), addition of hydropower to existing non-hydropower water resource facilities, and irri- gation hydropower of less than 5 MW.

l   Adds other types of waterpower facilities (ocean, tidal, etc.) to PTC eligibility.

l   Overrides problematical language in the Energy Policy Act of 2005 that dissuaded developers from installing hydro projects at non-hydro dams.

l   Adds $2 billion to Clean Renewable Energy Bond funding, for assisting non-taxpaying entities (e.g., state, local, and tribal governments), public power utilities, and electric cooperatives.

It might seem that making a case for hydro would be easy. After all, the industry can rely on some fundamental Big Facts:

»Hydro provides a much-needed societal good: energy in the form of electricity.

»It’s domestically produced and doesn’t need to be imported. Most of the jobs and economic activity created by hydro installations are “right here.”

»Hydro provides the lowest-cost electricity. Even new facilities built at today’s higher costs promise, in the long run, to provide a legacy of low-cost power owing to hydro’s inflation-resistant character vs. other energy sources.

»And, especially important in today’s policy environment, hydro is a low-carbon source of energy – perhaps the lowest.

Moreover, there are a host of important, less widely appreciated facts (“Insider Facts”), including:

»Hydro enables entire electricity networks to be more efficient and reliable. For example, due to its agile, quick- reacting character, hydro enables electric systems to respond to the many unexpected things that inevitably happen. In addition, hydro often aids load matching, enabling system operators to run large, baseload coal and nuclear plants at constant output (where they’re the most efficient and trouble-free) and accommodate load swings with hydro.

»Hydro can facilitate the integration of new renewables – e.g., wind, solar, ocean, tidal, and stream power – into electricity grids. Many of the new resources cannot be relied upon – power must be taken when it’s available. [Note that Spain is aggressively developing thousands of megawatts of new hydro and pumped storage to complement its wind power additions. Only recently passed by the U.S. as the world’s second largest wind power producer (after Germany), Spain sees adding this new hydro as essential.]

»Hydropower has the highest energy “payback ratio” of any source of electricity. That is, if you compare all of the energy that goes into building and fueling a generating facility, hydro returns typically “pays back” more than 150 times that energy over the plant’s lifetime. A coal-burning facility typically will return five times the energy or less.

The foregoing facts, and others, underlay the building of strong cases for policies favorable to hydro.

But facts are only part of the story. In the case of the Renewable Energy and Job Creation Act of 2008, many people and companies collaborated and worked with and through the National Hydropower Association (NHA) to get the hydro-friendly provisions in place. Moreover, in recent years the NHA has worked to lay a foundation for positive outcomes by orchestrating and participating in productive, solution-oriented conversations with non- governmental organizations – organizations that, absent these conversations, might have opposed hydro-friendly provisions.

Each of us needs to be knowledgeable of the relevant facts – yet that’s not enough. We need to both to support and participate in relevant and meaningful conversations.


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