(WASHINGTON, DC) -- NWPPA Executive Director Scott Corwin testified November 11 before
the U.S. Senate Committee on Energy & Natural Resources at a hearing
titled, "The Opportunities and Challenges for Maintaining Existing
Hydropower Capacity, Expanding Hydropower at Non-Powered Dams, and Increasing
Pumped Storage Hydropower." His statement is below.
Other witnesses included Malcolm Woolf of the National
Hydropower Association, Honorable Camille Calimlim Touton of the Bureau of
Reclamation, and Jennifer Garson of the U.S. Department of Energy (DOE).
Statement of Scott Corwin
Executive Director, Northwest Public Power Association
Before the Committee on Energy and Natural Resources
United States Senate
Hearing to examine the opportunities and challenges for
hydropower capacity
January 11, 2022
Chairman Manchin, Ranking Member Barrasso, and Members of
the Committee, thank you for the opportunity to testify today on the
opportunities and challenges for maintaining existing hydropower capacity,
expanding hydropower at non-powered dams, and increasing pumped storage
hydropower. The role of hydropower in our nation’s energy mix is more important
than ever. We appreciate you holding this hearing and appreciate your work and
support of hydroelectric power generation that our members rely on to energize
their communities.
While hydropower is one of our oldest forms of generating
electricity it is also a resource for the future because of its unique
attributes enabling newer forms of generation. These qualities include a high
level of flexibility that matches very well with the increasing need to balance
intermittent renewable generation sources such as wind and solar. It lends
system stability, reliability, ramping capacity, resilience, and effective
integration of other resources. It is also efficient in its conversion of
energy, uses reliable time-tested technology, and can be relatively low-cost.
While extensive use of energy stored in batteries may be in our future, the
ability to store the energy of falling water is serving us today and provides
the fast response needed on demand. Significant pursuit of development of
pumped storage hydropower projects will serve to create even more capacity for
meeting peak demand, avoiding reliability events, and balancing other
resources.
At this confluence in the history of energy policy, it
should be made clear for both existing federal programs and new programs on the
horizon that the definition of renewable power should specifically include
hydropower. Today, I will describe some of the challenges facing hydropower in
the federal regulatory realm and opportunities where the federal government can
help adopt polices that allow us to maintain and increase hydropower capacity
to address the many competing demands on today’s power systems.
Overview And Hydropower’s Role In The West
The Northwest Public Power Association is comprised of over
150 consumer-owned electric utilities in the Western United States and British
Columbia. These are rural electric cooperatives, municipalities, and public
utility districts governed by the people they serve and located in the states
of Alaska, California, Idaho, Montana, Nevada, Oregon, Utah, Washington, and
Wyoming, including Lower Valley Energy in Jackson, Wyoming, which relies
significantly on hydropower.
Our membership uses a wide mix of generation resources
including coal, natural gas, hydropower, nuclear, wind, solar, geothermal,
biomass, and diesel. Hydropower plays a large role in many of our member’s
service territories, and it is prominent in many rural communities in the West
that face economic challenges. A foundation of the Northwest region’s energy supply,
hydropower is a vital component of our nation’s clean energy generation
portfolio. Still only 7% of energy capacity nationally, hydropower provides 25%
of the capacity in Alaska, almost 60% of the capacity in the Northwest
generally, and almost 90% of the capacity used by our members who have
contracts with the federal power marketing administrations such as the Bonneville
Power Administration and Western Area Power Administration. Hydropower is the
original renewable beginning with the waterwheel used to grind corn in ancient
times. The dams lend not only a clean, continuing supply of power, but
multipurpose dams can be critical to transportation, irrigation, flood control,
water supply for municipal and industrial uses, and recreation as well. Losing
these assets would be devastating to many communities and would be threatening
to the stability of our electric system.
For this discussion today, it is useful to distinguish
between federal and non-federal dams.
Federal hydropower plays a large and critical role in our
region. The projects are owned and operated by the U.S. Army Corps of Engineers
and Bureau of Reclamation, but the customers of community-owned utilities with
preference rights to purchase that power pay for the costs of operating and
maintaining those projects. Federal projects are marketed by the federal power marketing
administrations but are not licensed by the Federal Energy Regulatory
Commission (FERC). They face a different regulatory regime than non-federal hydropower
and are subject to specific Congressional oversight.
With much of the potential for increasing hydropower
generation lying with non-federal developers, this area will be the focus of
these comments today. Creating more capacity for meeting peak demand is
critical to avoiding reliability concerns as more areas adopt energy policies
that call upon intermittent generation. The acknowledgment of the need for
hydropower has spanned several years and multiple administrations. For example,
the Department of Energy’s report from 2016, Hydropower Vision: A New Chapter
for America’s 1st Renewable Electricity Source, estimated that hydropower could
grow to nearly 150 GW by 2050. Today it stands at just over 80 GW.
This expected growth has not happened because public policy
and market design are not keeping up with the needs of the current and future
grid and have not adequately recognized, enabled, and priced the value of
hydropower. This is a threat to the viability of new and even existing hydropower
projects as it puts reinvestment in these resources is at risk. I will describe
some challenges and possible solutions for hydropower relating to:
- Leveling the playing field for federal incentives for
hydropower;
- Flexibility, resilience, and proper market valuation;
- Permitting challenges and next steps;
- Operational flexibility needed under FERC license
articles;
- Data-driven collaboration for predictive analytics for
system management;
- Dam safety regulation; and,
- Regulatory burdens to removing sediment from projects.
In addition, listed here for reference are positions within
the resolutions of NWPPA relating to hydropower that are intended to ensure an
adequate, safe, reliable, affordable supply of hydropower to meet policy priorities and
customer needs in the future. NWPPA has taken positions to:
- Urge Congress and the states to recognize all hydropower,
including existing hydropower, as a renewable resource;
- Support market design that values hydropower’s baseload
availability, flexible capacity, other ancillary services, and carbon-free
attributes;
- Support explicit inclusion of hydropower as a zero-carbon
electric generation resource that meets the requirements to be included in any
clean energy standard considered by Congress and/or the Administration;
- Support federal renewable and other clean energy
incentives that are equally available to hydropower and accessible to public
power utilities and rural electric cooperatives;
- Support federal investments in advanced hydropower
technologies through research, development, and incentives. A major opportunity
for increasing hydro-system output is reducing unplanned outages and increasing
hydropower’s contribution to grid reliability and resiliency;
- Support efforts by Congress to modernize hydropower
licensing by designating FERC as the lead agency for purposes of coordinating
all federal authorizations;
- Support reducing the time required for the hydropower licensing
process by better coordinating federal authorizations, adding schedule
discipline, improving trial-type hearings and fact-finding, requiring agencies
to equally consider other public purposes of a project when setting conditions,
and reducing duplicative study requests and those not tied to project
operations;
- Support federal, state, and local efforts to enact
policies that expedite the voluntary removal and redeposit of debris and
sediment runoff into hydropower reservoirs as a result of frequent and extreme
weather events; and,
- Oppose efforts to remove productive dams that provide, or
have the potential to provide, economic hydropower generation.
Incentives for hydropower: leveling the playing field
We want to thank Senator Cantwell and Senator Murkowski for
introducing S. 2306, the “Maintaining and Enhancing Hydroelectricity and River
Restoration Act of 2021” to create a 30% clean energy tax credit to support
upgrades at existing hydropower dams for dam safety, environmental
improvements, and grid resilience enhancements. We extend thanks to Senator Wyden
for his support of this issue in its consideration in tax legislation.
Importantly, the bill includes a direct pay option, which would allow municipal
and cooperative utilities to take advantage of the tax credit. With nearly
one-third of retail customers served by tax-exempt entities, equalizing the
treatment of hydropower in this way only makes sense if we are to continue to
develop this renewable, zero-carbon resource. We understand that elements of
this bill are in the latest Build Back Better proposal, and we support efforts
to include other provisions like ensuring that certain projects that have been
licensed by FERC, but are not yet built, can qualify.
These investments are sorely needed and in the public
interest because they enable us to continue providing baseload, emission-free
power that has all of the other qualities mentioned previously. As utilities
pursue transition of the generating resources in their portfolios to meet
regulatory objectives, especially in states like Oregon, Washington, and
California, support of hydropower projects is crucial if we are going to keep
the economy strong and the system reliable.
These investments are especially important to rural
communities that are particularly vulnerable to impacts of economic downturns.
Hydro facilities, once constructed, are some of the lowest cost generation
options, especially for rural communities that are not connected to traditional
grid systems. A good example is seen in Alaska. Our members there face much
higher energy costs than most of our members in the lower 48 states. There is
some significant hydropower, including a 120 MW plant owned by the state with
the power purchased by several of our member utilities, including Homer
Electric Association, which operates the plant. Still Alaska does not have the
historic benefit of very large electricity infrastructure projects. So, smaller
projects can have a big impact. Polices and incentives should be mindful of
considering smaller projects including those under 20 MW, which can have a
large impact in rural communities. Across the west the rate of energy industry
change is rapid with increased exploration of battery technology along with
additional wind and solar. To be successful operationally, environmentally, and
economically, these systems need support from a reliable baseload source like
hydropower.
Solutions- In addition to the previously mentioned tax
credits and direct pay incentives, increased grant programs putting hydropower
as a priority are a step in the right direction. In addition, FERC should
enable rapid licensing of pumped storage projects. When built with proper environmental
consideration, there is no better clean source of flexible capacity. Developers
and investors need permitting clarity to start building more of these as soon
as possible. A faster FERC license process for smaller, less complex hydropower
projects would also create a better path toward success. Other licensing issues
are discussed below.
Grid resilience, flexibility, and proper valuation of
hydropower in markets
The threat of electric system outages, especially during
severe weather is always a top concern to our members. Grid resiliency is
getting more focus at a national level as well, and it is helpful to see
program funding going toward a variety of technology and grid management
solutions. Hydropower is particularly well suited to lend a hand with
resilience as outlined in a useful Department of Energy report from October
2021 called Hydropower’s Contributions to Grid Resilience (PNNL-30554). It
noted the critical role hydropower can play in the Western Interconnection
during extreme events causing unplanned large loss of generation. This also underscores
why the investments in hydropower systems described above are so important. Even
small-scale, run of the river hydropower has potential for adding resiliency in
black start situations. In a demonstration project with public power utility
Idaho Falls Power, the Idaho National Laboratory completed a series of tests
designed to assess how small hydropower plants can provide startup power during
outages. The City of Idaho Falls owns several small run-of-river hydro plants
that, combined, can provide enough power to meet about one-third of the city’s
power needs. These were not built to be run off the grid, but tests with
varying operations enabled them to implement operational controls where they
could restart generators individually and then gradually add load to operate
the system in islanded mode – in effect, creating their own new microgrid
during emergencies.
Rapid restoration service is an important hydropower value.
And the qualities of hydropower that make it so useful for resilience also make
it uniquely valuable for many aspects of system operations, especially in
balancing systems with significant amounts of other variable resources like
wind and solar. Other electric system values offered by hydropower include:
- Load-following and flexibility reserve
- Energy imbalance
- Frequency response, reactive power, and voltage support
- Spinning reserve, and,
- Supplemental (non-spinning) reserve.
Even though it is only 10% of total generation for the
California Independent System Operator, hydropower provides up to 60% of
CAISO’s spinning reserves. For the Midcontinent Independent System Operator it
can provide up to 35% of spinning reserve requirements according to DOE’s
Hydropower Value Study: Current Status and Future Opportunities (January 2021
PNNL-29226).
Market valuation—This flexibility is very valuable and
needed to address the resource adequacy concerns arising from situations where
renewable portfolio standards and carbon policies create large amounts of
variable resources such as wind and solar that may not be available in a system
when needed most (for example an evening peak during hot weather). Traditional
markets value some attributes of power, such as energy, and were not designed
to provide proper price signals for capacity, ancillary services and other
attributes. If a renewable portfolio standard excludes hydropower, or its
storage and capacity is not valued, it is at a disadvantage even though it
could help meet the policy and operational priorities driving that system. This
issue is described in several recent reports including DOE’s Value Study cited
above, IEA’s Valuing Flexibility in Evolving Markets: Current Status and Future
Outlook for Hydropower (IEA, Annex IX, June 2021), and Reinvigorating
Hydropower (April 2019, NHA & Chelan County Public Utility District).
Solutions—there need to be more comprehensive market
mechanisms that can create accurate price formation to compensate hydropower
for what it does naturally to support the system and to incentivize dispatch of
hydropower in the areas and times of day it is needed most. Focus on this in
recent years, along with technological advances increasing data and system
visibility, has led to steps toward monetizing services such as frequency
response in some areas. But, there is much work ahead to achieve more explicit
compensation for the value offered by hydropower.
Challenges in permitting and next steps
The valuable aspects of hydropower place it in high demand.
A crucial question then is can existing or new hydropower projects navigate the
arduous federal permitting process in time to help meet the system needs that
are increasing every day. The laws around licensing are well-intentioned. Many
projects have some impact to the surrounding environment, and owners and operators
take their stewardship responsibilities and mitigation needs very seriously.
But often resources that could be invested in mitigation measures are tied up
instead to pay for lengthy processes and duplicative studies that may or may
not have a clear nexus to impacts of the project.
An example of this arduous permitting process for hydropower
is seen in a comparison of processes experienced by Energy Northwest, a public
power joint operating agency in Richland, Washington. It took less time with a
more straightforward and predictable process for them to renew the license for
their 1200 MW nuclear plant than it did for their 27 MW hydro project. In describing
how this could be the case, they highlight the contrast between having a clear
lead agency in the Nuclear Regulatory Commission with authority to drive and
manage the other agency reviews versus an array of agencies without firm
timelines for their hydro project. This is one more argument for FERC to be the
clearly designated lead agency for hydro license renewals with firm schedules
and accountability.
Many of the concerns regarding the complexity and timelines
of the permitting process for hydropower were outlined in the recent report
from the Department of Energy, An Examination of the Hydropower Licensing and
Federal Authorization Process (Technical Report NREL//TP6A20-7942, October
2021). It notes that 90% of projects seeking original licenses are abandoned
prior to receiving the license. This is for various reasons including the
length of time, the cost, the complexity, and the environmental measures
considered. Some factors in delay and cost include:
- The CWA 401 process is lengthy, costly, often duplicative
of other authorization processes;
- Staff turnover mid-project and lack of technical
expertise;
- Disagreement over scientific data, lack of trust among
stakeholders;
- Waiting time on studies from resource agencies; and,
- Requests for additional studies or information from
stakeholders;
An example of the licensing and environmental processes
faced even when attempting to reenergize an existing dam can be seen in
Washington where Okanogan County Public Utility District filed a preliminary
FERC License application in 2005 and received the license in 2013 but abandoned
efforts to reenergize the project in 2018. In total, the District spent more
than $18 million on this effort from 2005 through November 2018. In 2007, the
initial cost estimate to re-energize Enloe Dam was $31 million. Through the next
decade, it saw the addition of project risk, complexity, litigation, primarily
around the Clean Water Act (CWA) 401 certification process, and general cost
inflation due to the time lag. By November 2018, the 30% design cost to
construct the project had increased to over $87 million, which was
approximately $150/MW. Even after the decision to stop, the litigation
continued through the beginning of 2020.
In summary, time plus cost equals abandonment because
developers and investors have other places to focus their resources and project
sponsors cannot afford to continue to pursue these projects at exorbitant cost
on an unpredictable timeline.
We appreciate that there has been some progress in this
area, and that members of this committee have led strong efforts in Congress to
address the process delays and costs. NWPPA supports several pieces of
legislation on those issues. In addition, we recognize that there is some progress
from FERC under its existing authority to do what it can on process elements
such as the default length of license, and the ability to migrate from an
exemption application to a license application without completely starting
over.
Solutions- Proposals to improve the license and relicense
process include:
- Clearly establish FERC as the strong lead agency with
authority to demand strict accountability;
- Allow FERC to develop an enforceable schedule for the
issuance of all federal authorizations for a given project;
- Require FERC and other agencies to use relevant existing
studies and avoid duplicating studies relevant to an existing project;
- Resolve interagency disputes over licensing by referral to
OMB in consultation with CEQ; and
- Allow for trial-type hearings on certain mandatory
conditions.
FERC should allow operating flexibility to meet critical
needs
Beyond the process of the original license or relicense,
FERC licensed hydropower (public and private) often has constraints stipulated
in the license articles that unnecessarily limit its operations. This can
relate to operations such as the ability of the project to adapt to changes related
to climate or energy market operations, including articles pertaining to flood
control (typically under the direction of another entity such as the U. S. Army
Corps of Engineers), supporting recreational opportunities, environmental
mitigation, and protection of water quality.
These constraints are arguably necessary to ensure safe,
environmentally responsible, equitable operation of dams, but because they are
set into the terms of long-term licenses these constraints hinder the ability
of dams to adapt their operations in response to changes in public policy, climate-impacted
conditions, and the energy market. Hydropower fleet operators, such as Seattle City
Light, have seen changes to the hydrograph from wildfire, landslides, flooding,
and extreme weather that affect hydropower capacity through impacts on
equipment longevity and function, access to facilities, employee health and
safety, and supply chain integrity.
Solutions-- Given these impacts and increases in uncertainty,
variability, and demand, it would be helpful if FERC could offer additional
operating flexibility to support maintaining and increasing hydropower
capacity. Some solutions are:
- Grant operators greater flexibility to reorder the
priority of constraints included in their license articles to meet urgent
near-term needs. For example, flood control is mandated as the first
consideration in the order of operation. Naturally, safety is high priority.
But, in years with low flood risk, production of flexible capacity to support
reliability and renewable resource generation could be prioritized. The
operator is in the best position to determine the priority of its license
constraints in any given year.
- Establish a process for operators to quickly update their
license articles to allow them to adapt hydro operations to changing conditions
without having to go through a full-blown relicensing process. Currently, there
is not a way to do this without an unwieldy license amendment process. FERC
should consider an abbreviated license update process to allow utilities to
better keep up with a rapidly changing world of technology, market constructs,
and public policy considerations.
- Shed light on the trade-offs between competing
environmental interests (e.g., higher flows/spill for fish migration can result
in less clean hydropower to support integration of renewable resources). Make
this part of the relicensing process; FERC could help utilities make the case
that hydro flexibility has unrealized potential that can be part of a long-term,
comprehensive environmental solution.
Data-driven collaboration to maintain hydropower capacity
As the nation transitions to a cleaner electric grid, it is
more important than ever to ensure existing carbon-free hydropower capacity
remains cost-effective, available, and flexible to integrate other renewables.
However, our existing hydropower fleet is aging, and many asset owners are facing
significant reinvestment and maintenance costs. An important research area to consider
is predictive analytics, collecting the data to support its use, and
collaboration among hydropower owners to perfect it.
Solutions – The Hydropower Research Institute, a data-driven
collaborative of federal, public, and private hydropower owners, is focused on
identifying preemptive maintenance opportunities that can reduce the impacts of
extended forced outages, decrease maintenance costs, and ensure that hydropower
is available when most needed for grid reliability. We encourage federal support,
through DOE’s Water Power Technologies Office and others, to ensure our
existing hydropower fleet is able to meet energy needs as the nation
transitions to our energy future.
Dam safety regulation
Hydropower is not only affordable, renewable, and reliable,
but it is also a generally very safe form of power generation. Keeping dam
safety as a top priority is critically important to hydropower operators and
their communities. We appreciate the recent support and funding on this issue
in infrastructure legislation. There is, however, a regulatory aspect where
requirements mandated in the name of safety can be inconsistently or
arbitrarily applied. This seems to vary among regional offices of FERC. Hydro
facility operators are very accustomed to ensuring safety and providing
documentation to FERC regarding structures and foundational elements of the
dams. But, there appears to be a trend in some areas where project owners are
receiving requests from safety regulators for plans and studies that relate
more to operational or environmental matters than to safety. One example was
FERC asking the operator for a comprehensive evacuation plan in case of grass
fires despite the fact that the project is a concrete structure sitting in the
middle of a large river a quarter mile from the shore or any grass. Solutions—Operators
already have state agencies overseeing facility and occupational safety issues,
and there are already other FERC staff ensuring environmental compliance with
license provisions. FERC safety staff should not be requiring unnecessary or
redundant reports, studies, and action plans not directly related to safety.
This only creates more staffing and higher costs passed onto consumers, and it
detracts from resources that might otherwise be invested in actual safety
mitigation measures.
Hurdles to hydropower maintenance- permits to remove
sediment
Some of the challenges to hydropower involve the regulatory
process to simply maintain a facility in good working order. A notable example
of this is sediment removal when it involves federal lands. In areas prone to
wildfire, the run-off from the cycle of fires and floods on U.S. Forest Service
lands adjacent to reservoirs creates rapid buildup, dramatically reducing generating
capacity, restricting water supply, and potentially causing safety concerns at
the dam. For context, when the McKays Point Reservoir in California was
completed in 1989, original sedimentation buildup over 30 years was estimated
to be 43,560 cubic yards. However, the frequency of extreme weather events,
including floods, droughts, and wildfires, lead to greater rates of erosion
that flows into the reservoir. As a result, debris flowing from USFS land amounted
to 519,040 cubic yards—nearly 12 times greater than anticipated. This sediment buildup
limited storage capability, degraded water quality, and reduced overall
generation of a clean and renewable resource. This is happening in reservoirs
across the West.
Solutions – The least expensive option is to return the
sediment back onto USFS lands where it can be used for fire breaks, road
augmentation, and soil replacement. Regrettably, the process for securing a
"Special Use Permit" needed to relocate this noncontaminated sediment
back on USFS lands is broken. In the McKays Point example, the Northern
California Power Agency has worked with the local USFS office, as well as
headquarters in D.C., for more than two years to no avail. The process should
be reformed to promote a collaborative relationship, with the USFS accepting
relocated sediment for beneficial use in a timely, transparent, and efficient manner.
Federal permitting processes and laws must be reformed to recognize and reflect
the time-sensitive climate adaptation challenges this presents.
Conclusion
At a critical time in our nation’s history with respect to
energy policy, hydropower is positioned to lead us boldly into the future if
our state and federal policies allow it to do so. As a safe, reliable, and
low-cost resource that has the means to enable other renewable generation and
keep our system reliable, the potential for this proven technology is too
valuable to ignore. With the policy and operational challenges facing us in the
days and years to come hydropower can be one of the best tools in our industry
to help achieve our goals. Now is the time to act on streamlining regulation
and creating more equitable incentives and appropriate market signals to bring hydropower
to its full potential in our nation.
Thank you for your leadership in holding this hearing today.
We greatly appreciate the committee’s focus on this critical set of hydropower
issues. I would be glad to answer any questions today and to provide any
additional information for the record at your request.
