Hydropower industry officials are urging the Federal Energy Regulatory Commission to take several steps to simplify the process to obtain small hydropower licenses and exemptions.
FERC convened a technical conference Dec. 2, 2009, to discuss the commission's program for granting licenses to small hydro projects as well as exemptions to projects of 5 MW or less, or to hydro plants on water conduits. FERC staff noted the United States has 98,000 MW of hydropower capacity representing 9 percent of U.S. generating capacity. Of that, 54,700 MW is from non-federal, FERC-regulated hydro projects.
Citing a 2006 Department of Energy study, FERC staff said the U.S. has another 350,000 MW of hydropower potential. It said 60,000 MW of that is conservatively estimated to be developable, in a range of small projects: 38,000 MW between 2 and 60 MW; 16,000 MW less than 2 MW; 6,000 MW less than 200 kW.
The National Hydropower Association echoed those findings, citing its own new study on job creation opportunities in hydropower. (HydroWorld 10/13/09)
"Our recently commissioned jobs study, released just last month, reports the potential for 60,000 MW of new development by 2025. This translates to 700,000 cumulative jobs," NHA Executive Director Linda Church Ciocci told the commission. "... Small hydropower projects will play a critical role in meeting this goal."
NHA proposes policy, regulatory, legislative changes
Ciocci said NHA established a small hydropower council and initiated discussions with the conservation community on ways to grow small hydropower responsibly. It proposed several solutions under the categories of agency policy changes, regulatory or administrative changes, and legislative changes.
Under agency policy changes, NHA urged FERC to review and update its development agreements with the agencies that operate non-powered federal locks and dams to reduce time and redundant regulation in adding hydropower to such sites. The association said much of the unharnessed hydro potential exists at such federal sites.
Under regulatory or administrative changes, NHA recommended several process improvements. Notably, it suggested FERC revive its former regulations that had allowed an automatic approval process for non-controversial or unopposed hydropower exemptions. It also proposed the possibility of shared study results that would reduce costs to developers.
Under legislative changes, NHA proposed additional incentives for development of hydropower. Notably, it said Congress should change the tax code to increase the production tax credit for hydropower projects. Currently, qualified hydro projects receive only half the tax credit offered to other renewables technologies.
"We believe we must get to a smarter and more efficient licensing process, one that considers the economies of scale and is commensurate with the project,” Ciocci said.
Developer outlines hydro development barriers
Brent Smith of hydro developer Symbiotics LLC told FERC about development barriers for new hydroelectric projects.
Smith noted the time frame for FERC's Integrated Licensing Process is longer than the three-year time frame for a FERC preliminary permit, which protects a developer from competing license applications while he studies the feasibility of a site. Symbiotics proposed either accelerating the Integrated Licensing Process or increasing the preliminary permit term.
"This situation places the permit holder at risk of filing an original license application after the expiration of their permit," Symbiotics' statement said. "Without permit-based priority, the former permit holder risks losing the project if a municipality (with municipal licensing preference) files a competitive application regardless of whether the former permit holder is still engaged in the ILP process. This situation is actively discouraging new private investment in hydropower."
Symbiotics also said the Integrated Licensing Process, FERC's default licensing process, results in increased costs when used for original licenses. The developer proposed using FERC's traditional or Alternative Licensing processes instead, or condensing portions of the ILP process.
Symbiotics also complained that resource agencies with mandatory conditioning authority are delaying the issuance of recommendations or biological opinions by more than 24 months, discouraging new investment in hydro projects compared to other renewables with less resource agency oversight.
Actions that could expedite hydropower processing
FERC staff said factors that might reduce licensing time and costs are:
o Location of a project at an existing dam;
o Little change to water flow and use;
o Unlikelihood of affecting threatened species or to need fish passage;
o Applicant owns all lands;
o Applicant builds stakeholder consensus;
o Application is complete.
FERC staff also said there are commission actions that might expedite processing:
o Waive some pre-filing requirements with resource agency coordination;
o Combine scoping of issues with pre-filing consultation;
o Combine public noticing requirements;
o Shorten comment periods.
NHA urged FERC to initiate a formal notice of inquiry into facilitating responsible new hydro development.
FERC is taking comments on the subject of small hydro licensing under Docket AD09-9. Comments may be filed electronically or on paper. Filing instructions are on FERC's Internet site, www.ferc.gov, under Documents and Filing. For information, contact Steve Hocking, FERC, (1) 202-502-8753; E-mail: steve.hocking@ferc.gov.
